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What’s In Store for Montreal Commercial Real Estate This Year
February 12, 2026 4 Minute Read
Montreal’s commercial real estate market had mixed results in 2025, with office vacancy downtown hovering around 17.8% while industrial availability climbed steadily on the back of softened large bay demand, hitting 6.7% in the fourth quarter.
We spoke with CBRE Montreal Managing Director Louis Karam about what trends he’s tracking this year.
Flight to Quality Office Continues
2025 showed signs that we’ve hit a vacancy ceiling, ushering in a new demand cycle as tenants moved to premium office buildings. We see that continuing to be the story this year. Tenants are looking for modern, amenity rich buildings that are connected to transit.
Montreal’s downtown office vacancy is just under 18.0% but trophy assets are scarce with a 6.0% vacancy. There are few contiguous large blocks of space available in AAA buildings. There are only six AAA buildings and not every tenant can call these properties home. As a result we believe there will be a spillover of demand into the Class A and prime B properties as these landlords have invested heavily in upgrades and amenities.
Demand metrics were strong in the latter half of 2025. The fourth quarter witnessed a lot of office tours and Requests for Proposals (RFPs). Hopefully in 2026 we’ll see that activity translate into transactions. It’s occurring in Toronto where inquiries are becoming leases on paper. In Toronto banks lead the return to office push, tenants are experiencing bidding wars and worry their ideal space won’t be available in a year’s time. It is a complete flip of the script and we are seeing this unfold in Montreal, albeit at a slower pace.
Adaptability, Tenant Experience Matter
Regardless of the asset type, my guidance to investors and landlords is to focus on adaptability, diversification and tenant experience.
Adaptability means buildings that are designed for changing uses. Hybrid work is here, so tech integration is non-negotiable, and there needs to be a focus on wellness also. Diversification refers to the need to balance portfolios by different asset types and locations as a countermeasure to market volatility. And finally, focus on the tenant experience – treat tenants like customers and give them hospitality and responsiveness to drive retention. All of those apply to industrial, office, multifamily and retail properties.
Today’s market is driven by flexibility and cost efficiency because of the economic uncertainty. Clients are looking for shorter-term leases, expansion and contraction rights, and adaptable workspaces. Hybrid work has accelerated the shift to a hospitality model. Offices must earn the commute so landlords need to deliver experience to employees. Landlords are colloquially referring to an “amenity” checklist that includes cafes, gyms, concierge services, tech integration and community engagement programs.
Industrial Remains Fundamentally Strong
Despite noise in 2025, Montreal’s industrial real estate market remains fundamentally strong. A lot of leasing transactions took place, especially in Q4, but volume is not being spread evenly across bay sizes. In the past few months it seems like companies have woken up, processed trade uncertainty and are ready to make deals.
Amazon’s exit from Quebec returned 2.25M sq. ft. to the market. Their decision, coupled with slow leasing of new supply, means it will take time to absorb large bay. This had led to a bifurcation between size ranges. The small and mid-bay products remain resilient. But softness in large bay demand means tenants have greater negotiating power compared to other cycles. There are still developers bullish to build on spec as Montreal lacks Class A inventory, but the pipeline has slowed significantly compared to 2021-2023.
The silver lining? There are plenty of renewal options well below market value, even for large bay. It is a big reason why Dream’s joint venture with CPP Investments to create a $3 billion fund for “last-mile” properties has Montreal as a city of focus, alongside Toronto, Calgary, and London, ON.
The greatest risk to the Montreal industrial market this year is still the uncertain macroeconomic situation and U.S.-Canada relations. The Canada-US-Mexico Agreement is being reviewed and renegotiated, which is a risk that could further sideline decision making.
Multifamily Seeing a Slowdown
Multifamily was the best performing asset class in Montreal in 2025. It’s been showing some stability lately due to immigration policy, which has curbed population growth and limited student visas. This has slowed down demand downtown and has resulted in landlords establishing incentive programs to speed up absorption. Private investors are looking for older vintages while institutional investors desire new builds.
Opportunities Lie in Data Centres, Seniors Housing
The constant growth of AI and the role energy plays as a necessary requirement will drive data centre growth in Quebec. Our cold climate helps offset heating from computing power and our hydroelectricity capacity remains appealing.
And then there’s seniors housing. The demographics are promising. As the boomer generation ebbs toward retirement, there will be a big grey wave coming and we’re structurally undersupplied. This becomes a great way to diversify portfolios by capitalizing on emerging trends.
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