The Montreal industrial real estate market is showing signs of stabilizing after a period of rapid development and rent fluctuations, says JLL.

An oversupply of new industrial properties has led to a 7.7% decline in rental rates since their peak in 2023.

“It’s a good time to be an industrial tenant in Montreal,” Scott Figler, JLL’s head of Canadian research told Connect. “Rents are probably going to continue to suffer, and you’re going to be able to rent space for at a better rate.”
However, JLL notes in its 2025 Canadian outlook, the pace of these decreases has slowed, suggesting that the market may be approaching equilibrium.

Montreal’s large manufacturing base and strong trade relationship with the U.S. will play a crucial role in shaping the sector’s future, particularly in light of ongoing trade disputes, says the commercial real estate advisory firm. Additionally, the market’s ability to absorb 2 million square feet of newly available sublease space, including seven shuttered Amazon fulfillment centres, will be a key factor in determining future conditions.

A notable trend within the industrial sector is a “flight to height,” with high-ceiling warehouses (24 feet or more) seeing sharper declines in availability and positive absorption rates, while the broader market continues to experience negative absorption.

On the multi-residential side, average apartment rents in Montreal have dipped slightly year-over-year, coinciding with a 60-bps in the rental vacancy rate. However, average housing prices have surged 7.1% annually, underscoring a persistent supply imbalance. Most new construction in recent years has focused on rental units, while owned housing options remain scarce.

JLL notes that, according to the Canada Mortgage and Housing Corporation (CMHC), housing starts have steadily declined since peaking at nearly 41,000 units in 2021. In 2024, only 27,720 units were launched, a trend that could tighten housing market conditions in the coming years as Montreal continues to experience strong population growth.

Figler said the decline in residential starts will probably put upward pressure on rents and housing prices over the next few years.

Investment in multi-family housing also declined, with transaction volumes down 12.5% year-over-year to approximately $2.1 billion. However, pricing increased by 6.7% on a per-unit basis, highlighting the ongoing housing crunch and demand pressures in the market.

Photo: JLL