Montreal’s commercial real estate investment market is continuing to slow down as interest-rate hikes and rising construction expenses create uncertainty, says a new Altus report.

In the first half of 2023, Greater Montreal investment declined more than 50% year-over-year, said the real estate analytics firm.

In the second quarter, the beleaguered office sector posted a 50% gain in dollar volume, to $246 million, as private investors traded several class A properties. Office availability held firm quarter-over-quarter at 18.2% but remained high year-over-year.

With older office assets in disfavour, sublet space increased to 2.98 million square feet from 2.96 msf in the second quarter as the market experienced a flight to quality.

Apartment transaction dollar volume declined 37% year-over-year in the second quarter to $753 million. Meanwhile, the coveted industrial sector witnessed a 16% drop in dollar volume year-over-year to $488 million.

The retail sector rebounded in the second quarter, posting a 53% year-over-year gain with $263 million in volume.