Montreal’s industrial leasing market continued to lag in the second quarter. Vacancy rates across Greater Montreal rose to 7.25 per cent from 7.19 at the end of March. Jones Lang LaSalle (JLL) reports that merely 2 million square feet of space was leased  in the April to June period, while nearly 425,000 square feet was returned to the market.

Lachine, the South Shore and the East End reported stronger leasing demands than other Montreal markets.

There are currently 10 buildings under construction in the region, and the lack of zoned land on the island of Montreal has prompted increased activity in nearby submarkets. For instance, the North Shore of Montreal boasts four new projects totaling more than 500,000 square feet.

Meanwhile, former industrial properties in the midtown submarkets are being converted into office, residential and even commercial space.

Analysts suggest political uncertainty leading into this spring’s provincial election has had an impact. However, a pick-up in the provincial economy is expected to filter through to the market toward the end of the year.

JLL forecasts demand to increase for buildings greater than 50,000 square feet. Third party logistic companies are driving this trend.