Montréal’s commercial real estate pros gathered this week to hash out their toughest challenges, from unpredictable financing to the affordability squeeze. Perhaps not surprisingly, debates about the downtown core, question marks around office and the city’s multi-residential red tape drew the most attendees.
Here are Green Street News’ key takeaways from the Montréal Real Estate Forum.
Interest rates, policy uncertainty shape the outlook
Patrick Beaulé, executive vice president at CBRE, described CMHC interest rates as the fulcrum for the past six years. While the market nearly unanimously expected fundamental change in development possibilities, the relentless climb in interest rates from 2022 to 2024 forced many to rethink their strategies.
With rates finally dropping in mid-2024, questions remain about whether CMHC eligibility rules will keep pace. Beaulé noted that falling coupons on construction loans can make it easier for developers – as they can profit more off of lower rents. But rates are still high enough that roughly half of residential owners are still struggling to hit their projected rent increases.
Also, while land prices are under pressure, most still expect a return to a sellers’ market later this year, according to Beaulé.
Affordability, not supply, at the heart of the crisis
Natalie Voland, founder and head of vision at Gestion Immobilière Quo Vadis, set the forum’s tone: “We don’t have a housing crisis. We have an affordability crisis.”
Voland, who has gained ground as a developer by focusing on carbon-neutral, energy-efficient projects, argued that slow lease-ups and dropping rents point to a broken model.
Sophie Rousseau-Loiselle, director general at Société d’habitation et de développement de Montréal, echoed Voland’s view. Rather than building more affordable units, SHDM has capped rent increases on its 5,200 affordable doors to deliver immediate relief. With a 2.1% vacancy rate and 3,925 new apartments delivered, Rousseau-Loiselle argued the issue is not supply, but access.
Cost pressures and bureaucratic barriers remain stubborn
Adam Martelli, vice president of residential development for Broccolini, highlighted the financial challenges developers face.
“Sometimes the obligations imposed stop projects before they start. If you understand the numbers, anything is possible – but it has to make sense,” he said.
Even a 20% reduction in project costs doesn’t translate to 20% more profit, according to Anne-Sophie Frican, director of development at Construgep. Frican warned that city permitting processes and pre-construction costs pile up long before a shovel hits the ground, creating a burden that must be recouped through higher rents. She urged the industry to distinguish between real and projected inflation and called the path to profitability “high voltage” for most developers.
Evguenia Kapchii, director of acquisitions at GRM Société Immobilière Bélanger, commented that in today’s public market, sellers are holding out for premium prices, while institutional investors are more selective than ever. As BTB Real Estate Investment Trust chief executive Michel Léonard put it, few “opportunity cities” are getting the attention they once did.
Return-to-office debate moves beyond policy
The debate over in-person work focused on the future of Montréal’s downtown and the real estate market that depends on it. Ian Quint, founder and president at Brasswater, delivered a stark warning: “Without people in the office, downtown is at risk – and that threat spreads everywhere.” He argued that a vibrant core can’t exist if office towers sit empty, and said a five-day office presence should be enforced by leadership.
Jeff Soliman, president at VA Capital, sided with Quint on the need for a strong downtown presence. Several panelists noted that the success of retail, hospitality and even residential leasing is tied to office foot traffic – without it, the whole ecosystem suffers.
The discussion highlighted a growing divide in the industry. Some leaders believe hybrid work is here to stay, while others see a full return as essential for economic recovery. What’s clear is that the return-to-office debate is about more than productivity; it’s about the identity and future viability of Montréal as a business hub.
Survival in a volatile market
David Owen, senior partner at Mondev, spoke about the turbulence caused by sharp interest rate hikes and the challenges of securing loans in a volatile market.
During the pandemic, Owen quickly moved his loans from variable to fixed rates to protect his portfolio. “The ability to pivot with creative financing is more crucial than ever,” he said.
Owen also pointed to major sales to institutional investors as evidence that large capital is still active, even as conditions remain choppy.
Panelists agreed that the rapid rise and fall of interest rates has made traditional financing models less reliable. Developers have accordingly pivoted to seek new partnerships, private capital and alternative lenders – both to keep projects rolling and renegotiate terms as they move forward. The consensus was that adaptability isn’t just a competitive edge, it has become a matter of survival for many.
As costs rise and margins narrow, only those willing to rethink funding strategies are likely to remain standing, according to Owen.
Backing Québec’s entrepreneurs
Soliman underscored the need to support Québec’s entrepreneurs, and called for more transparency and honesty in industry conversations. He argued that local owners and builders are best positioned to understand community needs and drive meaningful change, especially when market swings make outside capital hesitant.
“In a market defined by swings and surprises, fostering local talent remains essential for shaping the city’s future,” Soliman told Green Street News.
Several speakers emphasized that supporting homegrown talent is not just about economic resilience. As Soliman put it, “It’s about safeguarding the city’s unique character in the face of rapid change.”
