Two huge seniors housing transactions helped buoy the commercial real estate market in Quebec, but transaction volumes in the province are expected to be down by up to 40 per cent in 2023, according to data from CBRE Montreal.

Aside from some activity in the industrial asset class, Canadian institutional investors largely stayed on the sidelines through much of the year according to Scott Speirs, CBRE's Montreal vice-chairman and national investment team practice lead. Real estate investment trusts were also relatively quiet as many continued to see their unit prices trade at a discount to net asset values.

Private investors have picked up some of the slack and Speirs said this segment recently returned to the market “with new vigour” as Canada's five-year government bond rate has dropped.

Foreign investors are interested

“There's actually a fair bit of foreign capital that is looking at Canada,” Speirs told RENX. “That speaks to the underlying strength of the Canadian economy and the strong demographics and population growth that’s forecasted for the coming years.”

Industrial (particularly small-bay), multifamily and grocery-anchored retail are the asset classes attracting the most attention, according to Speirs.

He noted that industrial and multifamily accounted for about 75 per cent of Montreal transaction activity in 2023. 

Bid/ask spreads have widened as pressure on vendors to sell has decreased and Speirs expects lighter trading volumes through at least the first quarter of 2024 until (and if) interest rates begin to decline.

“On a positive note, the pandemic’s disruption of capital markets has now likely turned a corner and will hopefully be a distant memory by the second half of 2024,” Speirs said.

Quebec’s top 10 CRE transactions

Listed here are the 10 largest (by dollar value) commercial real estate transactions of 2023 in Quebec, according to CBRE.

1. Toledo, Ohio-based Welltower Inc. and Montreal-headquartered Cogir Real Estate acquired 12 seniors housing properties on the south shore of Montreal and in Quebec City for $885 million from Desjardins on Oct. 31. Welltower has a 95 per cent ownership stake and Cogir has five per cent, but Cogir will manage the properties as part of the joint venture.

2. Dream Summit Industrial LP, owned 90 per cent by Singapore-based GIC and 10 per cent by Toronto-based Dream Industrial REIT, acquired Summit Industrial Income REIT for $5.9 billion on Feb. 17. The Quebec portion of the portfolio included 26 industrial properties in Saint-Laurent, Mercier-Hochelaga-Maisonneuve, Dorval, Pointe-Claire, Boisbriand, Baie d’Urfé, Lachine, Dorval, Vaudreuil-sur-le-Lac, LaSalle, Laval, Boucherville and Chambly totalling 4.53 million square feet and valued at $720 million.

3. Groupe Mach acquired 23 Quebec City apartment buildings with a combined 1,870 units from Quebec developer Groupe Huot for $561 million on Dec. 1.

4. Stockholm-based lithium-ion battery manufacturer Northvolt acquired 424.7 acres of land on De Richelieu Road in the Saint-Basile-le-Grand municipality in southwestern Quebec from Quartier MC2 Inc. for $240 million on Oct. 31. Northvolt will build a factory hosting 60 gigawatt hours of annual cell manufacturing capacity, with adjacent facilities for cathode active material production and battery recycling, on the site.

5. Toronto-based Timbercreek Financial acquired 582 seniors housing units in three residences at 2532-2534 Michel-Brault Pl. in Montreal from Laval-based Groupe Selection for $136.09 million on Aug. 31 after the vendor filed for creditor protection.

6. Redwood City, Calif.-based digital infrastructure company Equinix acquired a 575,795-square-foot telecommunications facility on 29.3 acres of land at 9200-9300 Transcanadienne Highway in Saint-Laurent from Hypertec Immobilier Inc. for $121.5 million on Aug. 24.

7. Veyron/Hal Qo Leasing ULC acquired a 725,000-square-foot industrial building at 23 Boulevard de l'Aéroport in Bromont from IBM Canada Limited for $110 million on Sept. 29. IBM will continue to operate the semiconductor packaging and testing facility.

8. Alberta Investment Management Corporation (AIMCo) and Laval-based Montoni acquired a 474,463-square-foot warehouse and distribution centre on 20.36 acres of land at 3400 Raymond-Lasnier St. in Saint-Laurent from Parkgreen Limited Partnership for $108.5 million on Feb. 23. AIMCo has a large majority ownership stake, according to Speirs.

9. Quebec-based social economy enterprise Société Immobilière Mainbourg acquired eight apartment buildings with a combined 720 units at the Domaine La Rousselière complex at 14005-14105 Sherbrooke St. E. in the eastern Montreal area of Rivière-des-Prairies-Pointe-aux-Trembles from Toronto-based Greenwin for $102 million on Nov. 2. The Government of Quebec, the City of Montreal, Desjardins, New Market Funds and Chagnon Foundation all contributed funds towards the purchase. The complex will be protected from the speculative market in order to preserve long-term affordability.

10. Toronto-based Brookfield Asset Management acquired two industrial buildings that combine for 124,000 square feet as well as hundreds of trailer parking stalls on 26.2 acres of land at 2770-2830 André Ave. in Dorval from Montreal-based Rosefellow for $88 million on March 12.

EDITOR'S NOTE: This article was updated after being published to correct the purchaser of the 2532-2534 Michel-Brault Pl. properties in transaction No. 5. Timbercreek Financial acquired the properties, not Hazelview Investments. The error was due to incorrect information provided to RENX. We apologize for any inconvenience caused by the error.