Greater Montreal Investment Review
H2 2023
An investment market ready to bounce back
In 2023, Montréal's commercial real estate market experienced a banner year for rental fundamentals, marked by positive absorption rates, rent growth, and low vacancy rates. However, capital markets faced some challenges as volatility roiled the debt markets. As we head in 2024, most investors remain well-capitalized with ample dry powder ready to be deployed. It is expected that transactional activity should pick up, especially when the first rate cut comes into effect.
5.65%
Average cap rates in line with national trend
National and local average cap rates have been rising since 2022. However, the historical risk premium of 25 to 50 basis points associated with Montreal has eased since 2020, and expected returns have aligned with national trends, reflecting the market's growing appeal to Canadian and foreign investors.
34%
YoY drop in GMA investment volumes over 2023
Investment volumes across the GMA dropped by 34% year-over-year (YoY), as volatility roiled the debt markets. The industrial sector saw the biggest change, with a 53% drop in sales, as a result of a market correction following two years of record activity.
38%
Share of investment volume allocated to the multi-residential sector
Multi-residential transactions accounted for 38% of all GMA sales, testifying to the resilience of this sector, and private buyers accounted for the majority of transactions, as institutional capital was sidelined given tighter lending conditions.
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