Q1 2026 Market Dashboard

Sources: S1-S8. Metrics use each source’s stated inventory universe and methodology; vacancy, availability and rent measures are not directly interchangeable.

Macro and Capital-Market Context

Montreal’s Q1 2026 market was defined by improved confidence but not a full liquidity reset. Lower rate volatility and a clearer development cost baseline supported renewed interest in defensible assets, yet underwriting remained conservative because of construction inflation, tenant incentives, absorption timing and the cost of capital. Investors continued to price assets around the durability of income rather than replacement cost alone.

The most constructive capital signals were found in assets with visible demand: downtown office connected to transit and amenity clusters, logistics facilities that can solve distribution costs, rental buildings with long-term affordability demand, high-performing retail nodes, and medical properties backed by essential service demand. Non-core office and speculative large-bay industrial remain harder to underwrite without compelling basis, leasing visibility or conversion optionality.

Multi-family Market

Greater Montreal’s rental market continued to ease as a wave of new purpose-built rental completions reached the market. CMHC reported a 2.9% purpose-built rental vacancy rate in 2025, up for the second consecutive year, while average two-bedroom rent increased 7.2% to $1,346. Supply growth was especially visible on the Island of Montreal and the South Shore, and leasing incentives became more common in newly completed product.

The easing vacancy rate does not mean the affordability challenge has been solved. CMHC noted that the most affordable units remained scarce, while rent growth continued to be influenced by renewals and provincial rent guidance. For developers, the key issue is not demand absence but revenue depth: new projects need realistic absorption, incentive, turnover and rent-growth assumptions.

Sources: S5, S8.

Office Market

Montreal office fundamentals remain highly bifurcated. Colliers reported a 17.2% GMA office vacancy rate in Q1 2026, with negative net absorption driven by Class B givebacks. At the same time, CBRE reported stronger downtown momentum, nearly 141,000 sf of downtown net absorption, and Class AAA vacancy of 6.2%, the lowest of all classes and below its five-year average.

The market has moved beyond simple flight-to-quality toward a fight-for-quality. Tenants are competing for the best-connected, amenitized and move-in-ready spaces, while older office product must either reinvest, discount, convert or find specialized users. A notable capital-market signal was CBRE’s preliminary Q1 office sales volume above $360 million, more than eight times Q1 2025.

Sources: S1, S2, S8.

Industrial Market

The industrial market showed signs of stabilization in Q1 2026 after several quarters of softer conditions. CBRE reported more than 336,000 sf of positive net absorption, vacancy down 80 bps to 5.4%, and the first vacancy reduction since Q4 2021. Colliers also pointed to an improving absorption backdrop but reported vacancy of 5.8%, availability of 6.5%, and average net rent of $14.04/sf, down from $14.14/sf in Q4 2025.

The supply story remains critical. CBRE estimated roughly 2.8 million sf under construction, heavily concentrated in Laval and the North Shore, while Colliers reported roughly 2.5 million sf in the construction pipeline. Large-bay Class A availability and high-clear oversupply continue to create tenant leverage. Development underwriting should separate true user demand from lease-up assumptions that rely on aggressive rent growth.

Sources: S3, S4, S8.

Retail Market

Montreal retail remains most constructive in high-productivity nodes: grocery-anchored centres, daily-needs services, restaurants, entertainment, luxury destination retail and mixed-use projects with pedestrian traffic. Royalmount is the most visible signal of the city’s evolving retail hierarchy. Retail Insider described the first phase as an 824,000 sf commercial centre, the province’s largest concentration of international luxury stores, with restaurants, cafes, a large urban park and a metro-linked skybridge.

For underwriting, retail value is increasingly tied to tenant sales productivity, placemaking, transit access, parking, food and beverage depth, service tenancy and the ability to support dwell time. Commodity retail without grocery, service or experiential anchors faces more limited pricing power.

Sources: S6, S8.

Hotel Market

Montreal hotel opportunities should be underwritten selectively. The city’s demand base is supported by tourism, festivals, conferences, downtown business travel, universities, hospitals and neighbourhood lifestyle demand. However, hotel feasibility is highly sensitive to brand standards, renovation scope, labour cost, food-and-beverage programming, seasonality, financing and replacement-cost inflation.

Because no single public Q1 2026 Montreal hotel operating dataset was used as a vacancy equivalent in this report, the hotel section is intentionally framed as a development and underwriting view rather than an occupancy/ADR/RevPAR scorecard. Altus Group’s 2026 hard-cost benchmarks for Montreal hotels range from $205-$280/sf for budget hotels, $260-$340/sf for suite hotels and $330-$480/sf for four-star full-service hotels before FF&E and other soft costs.

Sources: S8. Hotel operating metrics should be confirmed with property-level STR/operator data before investment decisions.

Medical / Healthcare Real Estate

Medical real estate remains one of the more defensive commercial categories. PwC / ULI identified healthcare real estate as positioned to outperform in 2026 due to demographic tailwinds, outpatient-care demand and its role as a defensive asset class. The sector benefits from needs-based demand, longer tenant relationships and the shift of more care into outpatient and community-based settings.

For Montreal, the opportunity set includes clinic, diagnostic, rehabilitation, wellness, dental, specialist and outpatient space near dense residential nodes, hospitals, transit and parking. The underwriting challenge is specialized construction: Altus Group benchmarks Montreal medical clinic / treatment centre hard costs at $375-$545/sf, excluding parking and FF&E, and notes healthcare costs vary significantly by facility type and clinical program.

Sources: S7, S8.

Notable Q1 2026 Transactions & Development Signals

Sources: S1-S8.

Construction Cost & Feasibility Context

Construction costs are now central to every Montreal commercial real estate decision. Altus Group’s 2026 Canadian Cost Guide notes that the construction industry has recalibrated to a new baseline, with structural pressures from labour availability, regulatory complexity, trade policy and geopolitical conditions. It also cautions that the 2026 figures are hard-cost benchmarks only and do not include pending tariff impacts, soft costs, land, financing, professional fees, permits, development charges, taxes, contingencies, broker commissions or developer profit.

Source: S8. Altus costs are conceptual hard-cost benchmarks only; project-specific estimates should be prepared by qualified professionals.

2026 Outlook & Strategic Implications

Precedent Developments’ view is that Montreal’s best 2026 opportunities are not broad-market beta trades. They are thesis-driven projects where the real estate solves a specific tenant, household, logistics, patient, retail or visitor need. The highest-risk projects are those that rely simultaneously on aggressive rent growth, short lease-up periods, declining construction costs and cap-rate compression.

Source Notes

Disclaimer & Limitations

This report has been prepared by Precedent Developments for general market insight and public information purposes only. It is not appraisal advice, brokerage advice, investment advice, legal advice, tax advice, quantity-surveying advice or a recommendation to buy, sell, finance, lease or develop any property. Market data has been compiled from public third-party sources considered relevant as of May 2026. Different providers use different inventory definitions and methodologies; therefore, figures should not be compared without understanding source methodology. Construction cost information is a broad conceptual guide and must be validated through project-specific costing, design, geotechnical, municipal, financing and legal review. Readers should obtain independent professional advice before making decisions based on this report.