The hard-hit Greater Montreal office leasing market is continuing to gain momentum, says a new report from Avison Young.

The market has displayed steady signs of recovery for the past two years after being hammered during the COVID-19 pandemic. Having prevailed since since 2022, the hybrid work model appears to be losing ground to the return-to-office movement as tenants take up large blocks of high-quality space, displaying pre-pandemic habits.

“Tenants who have left a significant portion of their premises vacant over the past five years are now reclaiming square footage, sometimes in the same building,” said Avison Young.

Approximately 20 downtown class A or trophy towers can currently accommodate the needs for 50,000 square feet of contiguous space.

The availability rate has fallen 1% to 18.6% since the peak recorded in the fourth quarter of 2023.

According to the company, now is the time for landlords to reposition buildings that have not been renovated. Tenants continue to favour class A and trophy buildings; as a result, class B properties are set to gain from the recovery as spaces in the best towers are leased up.

The recent easing of financing rates offers timely support for leasehold improvements, with premium fit out costs reaching $150 per square foot.

In the third quarter of 2025, direct downtown availability dropped by 285,000 square feet, while sublease space was down 340,000 sf. Total available space declined 667,000 sf quarter-over-quarter. The market posted 270,000 sf of positive absorption as sublease space declined for the fourth-consecutive quarter.

In the third quarter, total available space fell 667,000 sf quarter-over-quarter, with a 614,500-sf drop in sublease space accounting for most of the reduction. But total year-to-date absorption remained in negative territory.

Pictured: Montreal office buildings and other properties.

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