For two years, income-property investors kept asking me the same thing: where do I find a tenant? The market has shifted. Vacancy is rising, asking rents are leveling off, but the rents actually paid are still climbing. Here's how to read that turn when you own or are eyeing a multi-unit building on the South Shore.

Vacancy is back to a healthy level

Let's start with the number that sums it all up. According to Canada Mortgage and Housing Corporation, Montreal's apartment vacancy rate reached 2.9% in 2025, a second straight jump after bottoming at 1.8%. CMHC estimates the balanced range for Montreal sits between 2.5% and 4.0%. In other words, we're back to normal, not into oversupply. The market isn't choking anymore, it's breathing.

Two forces pushed in the same direction. New rental completions picked up, and immigration slowed. The result: newer buildings take longer to fill, sometimes months, while older stabilized buildings and larger family units stay in demand. CMHC says as much in its mid-year update. This isn't a market collapsing. It's a market sorting itself out by age and by price.

2.9%
Montreal apartment vacancy in 2025, inside the estimated balanced range (2.5% to 4.0%) per CMHC
+7.2%
Year-over-year rise in Montreal's average two-bedroom rent, to $1,346 (CMHC)
4.25–4.50%
Cap rates on Class A multi-residential buildings in Montreal, early 2026 (CBRE)

Rents are rising, despite the vacancy

Here's the nuance a lot of people miss. More vacancy does not mean falling rents. Asking rents, the ones in the ads, have leveled off in Montreal, unlike Toronto and Vancouver where they're dropping. But the average rent actually paid across all tenants is still going up. CMHC notes it climbed 7.2% for a two-bedroom in Montreal, to around $1,346 at the last survey. Most of that increase happens when a unit changes hands.

And in Montreal, people move very little. The turnover rate in the lowest rent quartile was 8.7% in 2025, versus 16.9% in the highest quartile. Established tenants stay put, protected by below-market rents. When a door does open up, the owner can bring it back to current market rent. That interplay, between stable sitting tenants and catch-up at turnover, keeps a building's income up even as overall vacancy rises.

Higher vacancy doesn't end rent increases. In Montreal, a building's income holds because tenants rarely move and each departure resets the unit to market rent.

The money is still there, and borrowing costs have settled

Investors haven't walked away from multi-residential, quite the opposite. According to Altus, Greater Montreal opened 2026 with $2.9 billion in commercial transactions in the first quarter, a 65% jump year over year, and multi-residential made up the largest share of that volume. It's the asset class buyers, both institutional and private, want most, because demand for housing doesn't disappear.

On returns, cap rates for Class A buildings in Montreal sat around 4.25% to 4.50% in early 2026 per CBRE, and yields held essentially flat in the second quarter. Borrowing costs help: on July 15, the Bank of Canada held its policy rate at 2.25%, a sixth pause in a row. For anyone running a five-year return calculation on a building, that stability is worth a lot. I laid out the MLI Select financing lever and the basics of investing in plex and multi-unit buildings in two earlier pieces.

What this means for you

  • You already own an income property on the South Shore: your income is probably steadier than the vacancy headlines suggest, especially if your tenants have been in place a long time. The real question is the gap between your current rents and the market. Before you renew a lease or sell, get your building's value and its turnover-income potential established. That's often where the value hides.
  • You're looking to buy: the return to normal vacancy gives you back a bit of time and negotiating room you didn't have two years ago. Aim for older, stabilized buildings, the ones where vacancy stays low, rather than high-end new construction that takes months to fill. With a stable policy rate at 2.25% and cap rates around 4.5%, the math works out cleanly.
  • You're torn between selling and holding: transaction volume shows buyers are very much present and willing to pay for a good building. If yours is well located and well kept, the demand is there. But a building that needs repositioning, with rents well below market, sells better with a strategy than on a whim.

I work both residential and commercial, and the income property sits right where the two meet. That's where I can be most useful to you on the South Shore. Want to know what your building is worth or assess a purchase? Request a free evaluation or write to me directly. I answer myself, every time.

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