Greater Montreal Area industrial average asking rents dropped to 2022 levels during the second quarter, says a new Avison Young report.

Landlords requested $15.70 per square foot on average, down from $16.80 at mid-year 2022. The reduction comes as Avison Young projects a possible shortage of industrial space in 2026 unless new projects are launched this year.

“Developers who take the risk of launching a project on a speculative basis will take the wind out of the sails of their competitors at the first signs of an upturn in demand,” said Avison Young. ‘However, it will be necessary to adapt supply to tenants’ appetite for smaller spaces.

A rise in vacancy to 5% on average testifies to the market correction from boom times experienced during the COV19-19 pandemic,, said the company.

Market conditions are becoming more favourable as falling interest rates, expected lower GDP growth and new developments.

Total availability increased by 2.4 million square feet from the previous quarter as the market recorded 5.1 msf in negative absorption year-over-year

Slower development activity witnessed this year should help curtail vacancy rates in the near future, according to Avison Young.