The third-quarter reports just landed, and they show a commercial market that is turning. Industrial, which had tightened for months, is giving tenants some breathing room again. Offices keep emptying from the bottom and filling from the top. Here's what the numbers actually say for the South Shore.

The backdrop: a steady rate, a decision today

Let's start with what frames every investment decision. On September 2, the Bank of Canada held its policy rate at 2.25%, with the Bank Rate at 2.5%. The economy is doing better: GDP rose 3.3% in the second quarter after a very weak start to the year. Inflation is hovering around 3%, mostly because of gasoline prices. Today, October 28, the Bank announces its next decision and publishes its Monetary Policy Report. Whatever the outcome, the message for a commercial buyer is the same as it was in the spring: the cost of money is calculable again, and that's what gets deals moving. I laid out the scenarios for this decision in my piece on the October 28 announcement.

8.9%
Greater Montreal industrial availability in Q3, up 80 basis points year over year (Altus)
7.7%
Downtown Class AAA office vacancy, 5.9% on a direct basis (Cushman & Wakefield)
2.25%
Bank of Canada policy rate, next decision October 28

Industrial gives tenants room again

The clearest signal of the quarter comes from industrial. Availability across Greater Montreal climbed to 8.9%, 80 basis points higher than a year ago, according to Altus. Nationally, the same rate sits at 6.2%. So Montreal is above the Canadian average, and that isn't bad news for everyone. A big chunk of the increase comes from a single building put back up for sublease, a former Amazon distribution centre in the Montérégie. When a property that size hits the market all at once, the statistics move fast.

The rest of the story is in the cranes. In Q3, Montreal had eighteen buildings under construction, close to three million square feet, mostly on the North Shore, in the Laurentians and in Laval. Nearly 69% of that space being built had not yet found a tenant. In other words, we're delivering faster than we're leasing. That's why rents aren't climbing: the national average net asking rent is holding between $15.50 and $16.00 per square foot, a stable floor rather than a jump. Demand hasn't vanished, though. The Canadian market just posted a fifth straight quarter of positive net absorption.

For an industrial owner on the South Shore, the good news is local: in Longueuil as in Laval, availability is running below the Greater Montreal average.

For the South Shore, that's the detail that matters. Altus notes that availability in Longueuil and Laval stayed below the metropolitan average. The softest submarkets are off-island, in the new speculative builds still hunting for tenants. If you own a well-located industrial building in Longueuil, your asset is holding up better than the regional average suggests. And if you're looking for space for your business, you have real negotiating leverage today, especially on new off-island product. Absorption will close that window eventually.

Offices: the top of the market tightens

On the office side, the clear Q3 signal is right at the top of the market. Downtown, vacancy in Class AAA towers is down to just 7.7%, and it drops to 5.9% if you count only space leased directly from the landlord, according to Cushman & Wakefield. That's tight. Companies that are moving are going for quality: newer buildings, well located, with services at the door. The rest of the inventory keeps carrying the weight of older, less well-placed space.

This isn't only a downtown story. The same sorting is happening on the South Shore. A maintained office park, close to the major arteries or a future REM station, stands out more and more from a 1990s building that was never refreshed. The value gap between the two keeps widening. I gave the full picture of the commercial market in the summer in my second-quarter review, and the detail on South Shore industrial in this August piece.

What this means for you

  • You own a building and are thinking of selling: quality gets paid for, and the gap with everything else widens quarter after quarter. A well-located, well-kept building is probably worth more than the regional average suggests, especially in Longueuil. A weaker-positioned asset deserves a clear strategy before it hits the market. Either way, the first step is knowing its real value.
  • You're a buyer or investor: a steady rate makes financing predictable, and this is the time to run the numbers seriously. The best opportunities are in new off-island industrial space, where supply is still weighing on prices, and in buildings to reposition. On the South Shore, tight submarkets like Longueuil ask for more patience but protect resale value better.
  • You're a business owner looking for space: the rise in availability works in your favour. You have room to negotiate on rent and on inducements, particularly on new off-island product. Pin down your needs now, while the choice is wide.

I work both sides of the market, residential and commercial, and it's often where the two intersect that the best opportunities on the South Shore reveal themselves. Want to know the value of your building or assess a project? Request a free evaluation or write to me directly. I answer personally.

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