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Vacancy continues its steady climb alongside falling rental rates and construction activity
Rental rates began trending downward in Q2 2023 and remain depressed compared to the post-pandemic peak. As vacancy rates have been steadily increasing since Q4 2022, landlords have been compelled to reduce rates to remain competitive. Vacancy has risen 170 basis points (bps) year over year, with rates moving in the inverse direction and dropping 5.2% over the same period. Notable decreases in rental rates have occurred in the East End and West Island submarkets, at 8.4% and 17.8% year over year, respectively. These same submarkets have experienced respective vacancy increases of 310 bps and 400 bps from last year. Beauharnois-Salaberry has posted the highest increase in vacancy year over year at 860 bps, with current vacant space totaling 1.7 million square feet (msf). Q3 marks nine consecutive quarters of negative net absorption in the Greater Montreal Area (GMA), with the year-to-date figure indicating a total contraction of 2.1 msf.