Future Cities

2023 North America Industrial Big Box Review & Outlook: Montreal

April 4, 2023 5 Minute Read

Montreal has experienced tremendous five-year rent growth, challenging tenants seeking lease renewals. Strong demand has led to low vacancy rates “on-island” and development is welcome. 2.7 million sq. ft. of space is currently under construction, with approximately 75% located off-island. These off-island developments are within reasonable driving distance, and technology advancements (automation, racking, transportation management systems, etc.) will facilitate optimization of these options.
Ruth FischerCBRE Senior Vice President and Managing Director


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More than 5 million people live within a 50-mile radius of the market core, with an expected five-year growth rate of 4.7%. The region can reach more than 10 million people within 250 miles, with a projected growth rate of 4.2% by 2027.

Figure 1: Montreal Population Analysis


Source: CBRE Research, Sitewise, January 2023.

The local warehouse labor force of over 133,920 is expected to grow by 7.4% by 2032. The average hourly wage of a non-supervisory employee is C$17 (USD $12.65), the second-lowest hourly wage of any other market in this report.

Figure 2: Montreal Warehouse & Storage Labor Fundamentals


*Median Wage in Canadian Dollars; Warehouseperson occupation (NOC 7452).
Source: Statistics Canada LFS (NOCs), Conference Board of Canada, CBRE Research, January 2023.

Location Incentives

Over the past five years, there have been 82 publicly known economic incentives deals totaling over $600 million for an average of $95,376 per new job in the Montreal metropolitan area, according to Wavteq.

CBRE’s Location Incentives Group reports that the extent, if any, of province and local incentives offerings for industrial projects in metro Montreal depends on location and scope of the operation.

Figure 3: Montreal Top Incentive Programs

Source: CBRE Location Incentives Group, Q4 2022.
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.

Logistics Driver

The Port of Montreal provides the market with a direct route to the Atlantic Ocean via the St. Lawrence River. This international year-round port handles cargo from over 100 markets in Europe, central Canada, and the U.S.’s Midwest and Northeast. The port processes over 18 million metric tons of cargo annually, and provides the shortest route between North America and Europe. With its own rail line connecting to Canada's two largest railroads, Canadian National and Canadian Pacific, the port provides direct logistical access throughout North America.

Originating in Montreal, the St. Lawrence Seaway provides sea-bearing container ships from the Atlantic Ocean access to Lake Ontario and the upper Great Lakes. This series of locks, canals and channels extends from Montreal to Lake Erie. A series of approximately 40 on/off ramps along the way provide ample connectivity to the highways and railways of North America.

Image of the Port of Montreal

The Port of Montreal processes over 18 million metric tons of cargo annually, and provides the shortest route between North America and Europe.

Capital Markets

Despite the rapid rise of interest rates, investor demand remains strong for the industrial asset class. It is our expectation that investor appetite will grow as the year progresses, due to the sector’s strong performance and limited alternatives across other asset classes. The higher cost of capital will further constrain new supply and be an additional catalyst for rental growth. The industrial sector is forecasted to be Montreal’s best-performing asset class in 2023.
Scott SpeirsCBRE Vice Chairman, National Investment Team

Supply & Demand

With 77.6 million sq. ft. of total inventory, Montreal is Canada’s second-largest big-box market. Like Toronto, the market is land-constrained and has a vacancy rate of just 1.3%, the sixth-lowest of any market in this report. Despite low vacancy rates, transaction volume doubled to 5.7 million sq. ft., increasing net absorption to 2.1 million sq. ft., double 2021’s total. Robust leasing and low vacancies created record-breaking rent growth of 52.7%, the second-highest in North America.

Occupiers focused on supply chain resiliency will keep demand strong near seaport markets like Montreal. With only 2.7 million sq. ft. under construction, vacancy rates will stay under 2% this year, further pressuring on taking rents in upcoming quarters.

Figure 4: Share of 2022 Leasing by Occupier Type


Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.

Figure 5: Lease Transaction Volume by Size Range


Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.

Figure 6: 2022 Construction Completions vs. Overall Net Absorption by Size Range


Source: CBRE Research, 2022.

Figure 7: Direct Vacancy Rate by Size Range


Source: CBRE Research, 2022.

Figure 8: Under Construction & Percentage Preleased


Source: CBRE Research, 2022.

Figure 9: First Year Taking Rents (psf/yr)

Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Note: Taking Rents are in $CAD
Source: CBRE Research, 2022.

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