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Market increasingly shifts towards tenant-sided dynamic as glut of large-bay space grows
Montreal’s industrial market continues to correct following the construction boom of recent years. Despite a recent tapering of the development pipeline, the Greater Montreal Area (GMA) recorded 2.6 million square feet (msf) of deliveries over the last four quarters. Older distribution space is no longer competitive at historical rates, and many occupiers are renewing in newer builds. Vacancy continues to rise, with a 200-basis-point (bps) increase from one year ago. Among GMA submarkets, Vaudreuil-Soulanges saw the largest year-over-year vacancy increase of 650 bps. While oversupply remains a key driver of loosening market conditions, tenant demand has also been more muted, especially as the U.S. has significantly altered its trade policies with Canada this year. Some occupiers in Q2 are still moving forward despite the uncertainty, as evidenced by a pickup in leading demand indicators such as touring.