A Data-Driven Outlook

by Joe Rullier

By 2026, the Quebec commercial real estate market will have completed something most investors underestimated in 2023 and 2024: a full reset. Not a crash. Not a rebound driven by speculation. A reset driven by math, fundamentals, and capital discipline.

After two years of stalled transactions, wide bid-ask spreads and refinancing stress, the Quebec market is entering 2026 with far more visibility on pricing, yields, and risk. For investors who understand the data behind the headlines, the opportunity is real.

Macro Environment in Quebec

Between 2022 and 2024, the rapid rise in interest rates pushed borrowing costs for commercial real estate from roughly 2 percent to over 6 percent in many cases. This single factor repriced every asset class.

By late 2025, policy rates have moved lower and stabilized in the low-to-mid 2 percent range. For Quebec investors, this matters less because rates are “low” and more because they are predictable. In practical terms, debt coverage ratios are workable again. Loan sizing is rational. Fixed-rate terms can be locked with confidence. This directly impacts asset values.

Transaction volume across Quebec declined roughly 35 to 40 percent from peak 2021 levels, but notably did not collapse. Deals still closed, but only when pricing reflected reality. Going into 2026, that repricing is largely absorbed into the system.

Multifamily in Quebec

Quebec remains structurally undersupplied in rental housing.

Greater Montréal alone added over 50,000 new residents annually on average since 2021, while new purpose-built rental deliveries failed to keep pace due to construction cost inflation, labor shortages and financing constraints.

Montreal’s rental vacancy rate has hovered near or below 3 percent for most of the last decade. Even with new projects coming online in select submarkets, demand continues to absorb supply quickly. Average rents for purpose-built rentals have risen consistently year over year, with stronger growth in properties built after 2000 and in buildings offering elevators, parking and modern amenities.

By 2026, multifamily cap rates in Quebec stabilize approximately 75 to 125 basis points above peak 2021 pricing, depending on asset quality and location. That adjustment already occurred. What follows is normalization, not further erosion.

Assets with 100 units or more, strong in-place income and professional management continue to attract institutional and private capital. Smaller buildings trade at wider spreads to account for capex, energy upgrades and management risk.

Multifamily in Quebec in 2026 is no longer priced for refinancing arbitrage. It is priced for cash flow, scale and durability.

Industrial and Logistics

Industrial remains one of the healthiest sectors in Quebec going into 2026, especially in core logistics corridors around Montréal, Laval, Longueuil and the South Shore.

During the peak of the e-commerce surge, industrial vacancy dropped under 2 percent in several submarkets. By 2025, new construction pushed vacancy closer to the 3 to 4 percent range in some areas. That is still well below long-term historical averages.

As of entering 2026, asking rents for modern industrial space remain significantly above pre-pandemic levels, often 40 to 70 percent higher depending on location and specifications.

Cap rates for stabilized industrial assets widened between 75 and 125 basis points from peak levels, primarily reflecting higher financing costs. With rates stabilizing, pricing stabilizes as well.

Owner-users represent a growing share of demand in Quebec, particularly for buildings under 100,000 square feet. Investors continue to favor infill, last-mile locations and assets with clear rental growth prospects.

2026 is not about explosive rent growth. It is about secure income and long-term relevance.

Office

Office in Quebec reached peak vacancy levels in 2024 and early 2025. Class B and C buildings in secondary locations absorbed the majority of that stress.

By 2026, overall vacancy in Montreal begins trending sideways to modestly downward, primarily because obsolete inventory is removed from the leasing market through conversions, repositioning or long-term vacancy.

Class A and AAA buildings continue to outperform. Tenants are leasing less space per employee, but paying more per square foot for quality, flexibility and amenities.

Average net effective rents in prime buildings remain resilient, while incentives normalize. Buildings unable to compete face either price discovery or reinvention.

Transaction data shows office trading volume remains well below historic averages, but deal flow increases modestly in 2026 as distressed pricing and replacement cost gaps become clearer.

Office is no longer a blanket thesis. It is a building-by-building decision.

Retail

Retail in Quebec proves far more resilient than expected.

Neighborhood retail vacancy remains low across the province, often below 4 percent in grocery-anchored centers. Strip centers anchored by food, pharmacy and daily services maintain stable income streams.

Urban retail corridors in Montreal benefit from tourism recovery, population density and limited supply of new space. Rents grow selectively in prime streets, while secondary streets remain tenant-driven.

Retail investment volume rebounded strongly in 2025, driven by large portfolio transactions and private investor demand for stable yield.

Cap rates for necessity-based retail remain competitive relative to multifamily, particularly when lease terms are long and tenant credit is strong.

Retail in Quebec in 2026 is not a growth story. It is a yield and stability story.

Land and Development

Land pricing in Quebec undergoes significant segmentation.

Fully or near-entitled sites in strong residential corridors maintain value. Raw or speculative land without zoning clarity trades at steep discounts or not at all.

Construction starts slowed materially between 2023 and 2025. This creates a supply gap that becomes visible in 2026 and beyond, particularly in rental housing.

Developers who move forward do so with higher equity contributions, conservative underwriting and longer timelines. Lenders favor experience, scale and demonstrable execution history.

Transit-oriented, mixed-use and residential-heavy projects dominate what little speculative development proceeds.

Land in Quebec in 2026 rewards certainty, not imagination.

What the Data Is Really Saying About 2026

Pricing is no longer guessing. It is accepted.

Debt is no longer frozen. It is selective.

Distress exists, but it is concentrated. Not systemic.

The biggest risk heading into 2026 is not market collapse. It is underestimating the quality gap between assets.

Buildings with scale, income durability and location recover faster. Buildings without those characteristics fall further behind.

Final Perspective

2026 in Quebec is not about waiting for rates to fall another point. It is about understanding that the repricing already happened.

Investors who deploy capital with discipline in 2026 are buying assets repriced by math, not emotion.

In my view, this period will be remembered as one of the most important entry windows of the decade for Quebec commercial real estate.

Quiet opportunities. Real numbers. Long-term outcomes.
That is how value is created in this market.