Rental-rate increases slow as vacancy rates remain stable for the third straight quarter

For the first time in five years, the Greater Montreal Area (GMA) saw vacancy rates remain somewhat stable over a nine-month period. Up 90 basis points from Q1 2022, vacancy rates in the GMA have stabilized in the 2% range. Rental rates continue to climb; however, the pace of growth has slowed drastically. Rents increased 2.8% over the past quarter after climbing 60.7% during 2022. While vacancy rates have stabilized, Q1 2023 saw leasing activity slow from previous quarters. User demand remains strong; however, rising interest rates and fear of an economic recession have weighed on the leasing market in the past quarter, as evidenced by negative absorption. As fears of a slowdown increase, some developers are changing strategy. While speculative construction remains a feature of the market, an increasing number of projects are delaying breaking ground until tenants are secured.

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