With the 2026 Montreal Real Estate Forum on the horizon, Roberto D’Abate, Vice President of Financing, takes a closer look at the forces influencing one of Canada’s most popular rental markets. Montreal, a market long defined by its renter-heavy demographic, is transitioning into a new phase. This shift is shaped not only by demand but also by changing underwriting discipline, policy shifts, and new areas of opportunity for development.
Key Insights
- Even with the influx of new deliveries, renters continue to lack affordable options, as elevated construction costs push rents above affordability thresholds.
- Representing 49% of total investment volume in 2025, multifamily assets remain the preferred asset class within Montreal’s commercial real estate landscape as investors seek comparably safer asset classes in resilient rental markets.
- Suburban areas offering a lower cost of living and strong transit access are well-positioned to sustain new development, as developers navigate red tape in the downtown core.
Market Fundamentals
Changing immigration levels continue to influence rental demand, particularly in areas attracting the bulk of new arrivals. As deliveries remain elevated, vacancy rates are expected to rise to 3.5% this year as rental demand works through existing supply.1 Even as market conditions shift in favour of renters, rent prices have continued to rise in Montreal, even for older, lower-cost units.2 The rising cost of development is also driving up rent prices due to labour shortages and inflated material costs.
Chart 1: Montreal’s Turnover Rents Outpace Other Major Canadian Cities2
For existing and incoming residents, this has limited affordable options as renters become increasingly priced out of the market. Highlighting a defining feature of the current cycle: while tenants may have access to more choices, affordability pressures persist.
Cap Rates & Transaction Activity
Multifamily assets continue to represent the most sought-after segment of Montreal’s commercial real estate market. Cap rates on multifamily assets remain significantly more compressed than in other sectors, with high-rise rates at 4.25%-5.25%, in line with low-rise rates.3 Representing 49% of total investment volume in 2025, $5.2 billion, multifamily assets remain the preferred asset class within Montreal’s commercial real estate landscape as investors seek comparably safer asset classes in resilient rental markets.4 Across current transactions, underwriting is increasingly anchored in income fundamentals. Investor focus has shifted toward the resilience of cash flows and execution certainty, rather than relying solely on cap rate compression.
Chart 2: Multifamily Remains the Preferred Asset Class Among Investors4
Market Trends: Public Policy Shifts & Suburban Development
A possible tailwind for multifamily development lies in the plans of the newly elected mayor, Soraya Martinez Ferrada. Her pro-development agenda, which focuses on loosening restrictions and opening city-owned land to private projects, sends a clear signal to the rental market. With $30 million already committed to subsidized land access and another $50 million earmarked, her development-friendly stance could meaningfully support multifamily builds.5
At the same time, suburban cities have gained significant development momentum as red tape continues to constrain construction in downtown cores. Laval, north of Montreal, exemplifies this trend, where developer-friendly regulatory policies and tax advantages have made it a compelling destination for investors. With transaction volume reaching nearly $850 million in 2025, a 383% year-over-year increase, Laval has firmly established itself as a rental development hotspot.4 As Montreal remains a renter-dominated market, suburban areas offering a lower cost of living and strong transit access are well-positioned to sustain this wave of new development.
Market Outlook
As Canada’s multifamily sector works through moderate cyclical softening, Montreal is no exception. Yet context matters: with more than 63% of residents renting, almost twice the national average, Montreal’s structural demand remains intact.6 As such, this softening period is expected to be a cyclical headwind rather than a lasting shift.
In line with softening conditions, vacancy rates are expected to continue to climb, yet rents look to grow given the elevated cost of new builds entering the market. As units become increasingly unaffordable, the need for development that prioritizes affordability will only increase. Favourable lending programs, such as CMHC’s MLI Select, will continue to drive purpose-built construction, as well as renovations of vintage assets.
Even with cyclical headwinds, Montreal continues to stand out as one of Canada’s most compelling multifamily markets. While the opportunity set remains attractive, performance will be increasingly driven by execution. Discipline around cost management, regulatory navigation, and financing strategy alignment with current market dynamics will be key to achieving targeted returns.
The Peakhill Advantage
As a leading CMHC-insured lender, Peakhill is committed to providing flexible financing structures to our clients, offering term, bridge, and construction lending options. With $2.6 billion in total financings across Montreal since inception, Peakhill is an active lender supporting commercial real estate owners and developers. Working alongside our clients, we align financing solutions with project-specific requirements and ever-changing market conditions.
Download the French Version
Read “A Closer Look at Montreal’s Multifamily Market: The Forces Redefining Canada’s Rental Capital” in French.
Examen approfondi du marché multirésidentiel de Montréal : les forces qui redéfinissent la capitale locative du Canada
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Footnotes
- Marcus & Millichap. 2026. Multifamily Montreal Metro Area. ↩︎
- CMHC. 2026. 2025 Rental Report. ↩︎
- Colliers. 2026. Canada Cap Rate Report Q4 2025. ↩︎
- Altus Group. 2026. Montreal commercial real estate market update – Q4 2025. ↩︎
- CBC. 2026. Montreal aims to address housing crisis by easing rules for developers. ↩︎
- The Suburban. 2024. Montreal leads country in renters at 63%. ↩︎
