Q4 2024 Montreal Office Market Report

The office market remains highly tenant favorable this quarter as vacancy continues to rise slightly and companies become accustomed to their hybrid work model. Vacancy rates increased slightly this quarter to approximately 19.1 percent across the Greater Montreal Area (GMA), only having risen by 32 bps increase since last quarter. Sublease space continues to remain an interesting option for tenants and make up 15.8% of available space this quarter. Of all building categories, Class B buildings are currently the least performing and are experiencing the highest vacancies at approximately 22.3% across the GMA. This is due to the flight to quality tenants seek by rationalizing their space and offering a flexible work model at a higher cost PSF located in buildings that offer all amenities and direct accessibility. For the companies now making in-office work mandatory, the net effect is an overall reduction in total occupancy costs and a superior in-office experience for employees. Accordingly, Class AAA buildings and Class A buildings Downtown are outperforming all other classes, with downtown AAA rents continuing to increase annually. At an average vacancy of approximately 8.3% downtown, Overall Average Asking Gross Rents for a AAA Building are exceeding $70.00 PSF in some cases. Class B buildings continue to remain steady and asking approximately 32-33.00$ Gross PSF however, landlords in this class are much more incentivized and negotiable. Due to an overall decrease in demand for office space since the Pandemic, there is only 235,000 SF in new construction coming to market in the next 12 months. Average Asking Net Rents are expected to remain stable with Landlords offering higher Tenant Improvement packages, free rent and other inducements to attract and retain tenants.