Montreal rental market: looking beyond the occupancy rate

The Montreal rental market is shifting. But the pressure isn’t spread evenly across buildings.

Some owners have to offer incentives to attract tenants. Others are dealing with costlier renovations. And the same building can face both.

On Monday, I attended APCIQ’s Forum immobilier commercial, where three presentations helped put these trends into perspective.

Demand is slowing. Hélène Bégin, Expert Economist at APCIQ, presented a weaker economic outlook and declining rental demand from international students and temporary workers. For investors, this is a reason to revisit assumptions on rent growth and on how long vacant units take to lease.

Owners are already feeling the change. Éric Sansoucy (CORPIQ) highlighted rising vacancy and the return of free months of rent. At the same time, the residential renovation price index rose 49% between 2017 and 2025. A building’s condition and its upcoming capital work now carry significant weight in the analysis.

Economist Mario Lefebvre’s presentation also highlighted a multi-speed market. In new buildings, the initial lease-up period explains part of the vacancy. Rent levels and the changing pool of potential tenants also contribute to leasing challenges and the use of incentives.

My take: risks are evolving, and they show up differently depending on each building’s positioning and condition.

More affordable rents can support demand, but on their own they say nothing about renovation needs. A newer building may require less work in the short term, while generating less income than projected because of vacancy and leasing concessions.

For investors, this means looking beyond the occupancy rate. Purchase price, capital expenditures, achievable rental income and financing together determine the return a building can generate.

This is where Portfolio+ turns market outlooks into concrete decisions for your buildings.

As part of PMML’s advisory service, we use Portfolio+, our in-house analysis tool, to benchmark your buildings against the market, analyze projected returns, assess renovation scenarios and measure the impact of less favourable conditions on your portfolio. With today’s fluctuations, it pays to know your opportunities and risks now, so you can prepare rather than react.

A relationship to watch: how occupancy translates into returns. Higher occupancy can come with leasing concessions, while stable income can coexist with growing capital needs.

The occupancy rate shows how leased a building is. The income actually collected and the capital still to be invested say far more about its performance.