Commercial real estate in Quebec recovered somewhat in 2024, after a difficult year. But the anemic activity in December portends a relapse in 2025.
Published at 6:00 a.m.
Number of transactions: +12%
The results of commercial transactions over the last 12 months are “slightly positive”, the RE/MAX Québec report tells us, with a 12% increase in the number of sales compared to 2023. But this data is not as conclusive let them show it.
“We are roughly the same as last year, or a little better, but we are still in significant decline [par rapport à] 2022,” explained Christian-Pierre Côté, executive director at Côté-Mercier Data Services. Unlike short-term interest rates, which have suffered significant downward fluctuations this year, long-term rates have not followed the same pace, specifies the analyst: this is what has blocked, above all, commercial real estate investors.
Furthermore, the impact of interest rates is among the first real estate issues to follow in 2025, according to the list prepared each year by Luciano D’Iorio, regional president and managing partner at CDNGLOBAL Québec. “But it is also the cost of construction and the delivery schedules that cause the phenomenon,” he emphasizes.
The tax threat made sellers move
Much of the 2024 recovery is attributable to the second quarter of the year. Between 1is April and 1is July 2024, sales totaled $4.73 billion, more than a third of the total volume recorded in the year.
On April 16, the federal government announced that it would increase, in June, the portion of capital gains that is taxable for any asset whose resale will generate at least $250,000. “It got ahead of [des ventes] and encouraged many owners to make transactions to avoid getting to that point, to avoid being overtaxed, to avoid being subject to the tax increase,” explains Mr. Côté.
A volume of 2 billion in Montreal
Overall, Montreal’s real estate market is doing well: this year’s sales volume in the metropolis ($2 billion) is not only higher than in 2023 ($1.89 billion), but also more important than in 2022 ($2.62 billion), according to RE/MAX Québec. Mr. D’Iorio is thinking in particular of the sale of 1434, rue Sainte-Catherine Ouest, a five-story office building which will be converted into student residences, in July 2024.
Montreal also stood out between the 1is July and 1is October, where properties on its territory occupied three quarters of the sales volumes. “Laval also experienced an exceptional increase in transactions [dans ce trimestre] », Shows the results. The majority of regions, such as Gatineau or Sherbrooke, are also experiencing a slight recovery in activity.
Commercial premises stand out at the end of the year
The RE/MAX commercial balance sheet includes transactions for industrial buildings, residential buildings, land and commercial buildings. The latter category occupied almost half (48%) of the sales volumes for the third quarter of 2024. This high proportion can be explained by a marked drop in sales in other sectors, notes Christian-Pierre Côté. For example, only 142 multi-unit transactions were concluded during this quarter, compared to 333 during the same period in 2023. This is the same observation for the industrial sector, which experienced the greatest decline of the four categories.
Mr. D’Iorio also notes that there is a greater supply of industrial buildings on the market in 2024 than in 2023. Conversely, he notes that offices of less than 10,000 square feet – which generally accommodate a company with 50 employees or less – have become rarer.
Forecast for 2025
So far, the data from the last quarter of 2024 – which will be part of next year’s results – do not bode well for 2025, says Mr. Côté. “ [Pour l’instant]the figures are lower than in the last five years,” he notes. The analyst explains that the month of December is generally a month when a lot of transactions take place. In his opinion, a lot of uncertainty will still hover over the real estate market in general next year.
According to Luciano D’Iorio, if there was one essential issue to follow for 2025, it would be… the elections, both federal and municipal. “Perhaps we will not see the impact immediately in 2025, but the impact will be in the medium and long term,” he explains. Among the major regional projects and developments to follow, according to his track record: eastern Montreal, Place Versailles and the Montreal Metropolitan Airport. Climate change also represents an issue to be taken into account more and more in real estate, in his opinion: “We only have to think about Debby », he concludes.
