Quebec Commercial Rent Increases in 2026: Legal Framework

Executive summary

This in-depth study examines commercial rent increases in Quebec for 2026, looking at legal frameworks, the indices used to index rents, and negotiation strategies for landlords and tenants. Unlike the residential sector, commercial leases in Quebec are governed by complete freedom of contract: there is no legal cap or automatic mechanism regulating increases ^[1]. The parties (landlord and tenant) freely negotiate the new rent when renewing the lease, often based on predetermined formulas or indices. Common examples of rent review clauses include annual “fixed” increases, adjustments tracking inflation (CPI), or a charge tied to sales revenue ^{[2] [3]}.

On the market side, recent data indicate that rents are generally stabilizing in 2025–2026, following the exceptional post-COVID increase. For example, in mid-2025 Montreal had a high vacancy rate (~19–20% for downtown offices) and Class A rents around $18–23/sq. ft./year ^{[4] [4]}, while the industrial sector still showed strong demand (net rents of about $14–15/sq. ft.) with a low vacancy rate (~5–7%) ^[4]. In retail, rents remained generally stable, with gross rents per square foot reaching $40–60/sq. ft. on sought-after Montreal streets and $30–45/sq. ft. in Quebec City ^[4]. Experts emphasize, however, that these segments will recover slowly: effective rent increases remain moderate (typically 2–5%/year net of inflation for quality locations) and depend largely on continued low inflation and landlord incentives ^{[4] [4]}.

In practice, the “indices” used to review commercial rent are almost always based on the Consumer Price Index (CPI) or specific contractual formulas. In early 2026, Quebec’s CPI was rising by about 3.0% year over year ^[5], while inflation in Canada was around 2.3% ^[6]. These figures serve as benchmarks for assessing the reasonableness of proposed increases. Statistics Canada also publishes a Commercial Rents Services Price Index (CRSPI), which measures changes in effective net rent in Canada ^[7], illustrating inflation within this sector, even though it is not directly used in contracts.

The parties therefore need a clear understanding of the context: Quebec’s economy is expected to remain sluggish ( GDP growth ~1%), while the population continues to grow ^[4]. Interest rates remain high, tempering the appetite for rent increases. In this context, the negotiation strategies that have become key for tenants involve establishing the justification for any increase (through market comparisons, financing and arguments in support of their position) and requesting concessions (rent credits, improvements, flexible clauses) when market conditions are favourable. Professional resources advise, in particular, consulting a specialized lawyer ^[8], studying the local market ^[9], and understanding all costs (taxes, insurance, maintenance) before renegotiating a lease ^{[10] [11]}. For landlords, it is important to align rent with the balance of supply and demand, while proposing tailored, justifiable increases to avoid accusations of abuse: Quebec case law has, in fact, held that an exorbitant increase could violate the contractual obligation of good faith ^[12].

In short, while the legal framework supports freedom of contract, moderate economic conditions and current market expectations are encouraging reasonable, gradual rent increases in 2026. The parties must prepare with accurate data and follow negotiation best practices to reach a lasting compromise.

Introduction and context

In Quebec, a commercial lease (or business lease) is defined by the Civil Code as a contract under which an owner (lessor) provides a lessee (tenant) with the enjoyment of an immovable for commercial, industrial or craft use in exchange for rent (art. 1851 CCQ) ^[13]. Unlike residential leases (governed by the Act respecting the Régie du logement and the Administrative Housing Tribunal), commercial leases remain largely subject to freedom of contract. In practice, this means that the terms of the contract – including the provisions for rent review – are freely negotiated between the parties ^{[14] [1]}. Indeed, several aspects codified in the Civil Code apply as default rules: for example, the Civil Code articles on leases (1851 to 1890 CCQ) provide default rules, but the parties may depart from them by express agreement ^[14]. As Gowling WLG observed, “the provisions of the Civil Code apply as default rules. Thus, if a situation provided for in the CCQ is not covered by an express agreement to the contrary, the relevant CCQ provision is presumed to form part of the contract ^[14].”

This contractual autonomy nevertheless operates within a specific economic and regulatory landscape. In particular, Quebec has faced a major residential housing crisis since 2021, prompting authorities to intensify housing rent regulation (e.g., Bill 31, the 2026 regulatory framework, etc.), but no equivalent change exists for commercial leases. The provincial legislature has thus expressly excluded any rent control for commercial premises: as a legal guide explains, “Unlike residential properties, there is no government regulation governing the setting of rent for commercial buildings in Quebec. The Administrative Housing Tribunal does not cap increases, and there is no official tool for calculating a ‘reasonable’ rent. A commercial landlord can increase rent by 5%, 50% or 500% at the end of a lease if they wish ^[1].” Thus, the law imposes no maximum increase: everything is left to negotiation or the lease terms. In practice, long-term commercial leases (≥5 years) often require the landlord to provide a certificate of location before renewal, which confirms the new rent if the tenant accepts it; otherwise, the obligation is lifted. However, no automatic recalculation mechanism applies outside an agreement.

At the same time, recent economic conditions have significantly influenced the commercial rental market. The COVID-19 pandemic (2020–2021) led to forced closures and an increase in remote work, significantly raising vacancy rates, particularly in the office segment. Governments (federal and provincial) introduced subsidies to support business rents (e.g., CEWS, CEWS/commercial rent subprograms) to prevent a wave of terminations, but it was often up to landlords and tenants to renegotiate their leases. This context prompted some landlords to propose significant rent adjustments, while many tenants sought payment extensions or discounts. With the gradual return to normal business activity (2022–2024), commercial occupancy rates began to recover.

In Quebec, according to the Institut de la statistique du Québec, the economy is showing only modest growth (real GDP ~1–1.5% in late 2024) ^[4], supported by steady population growth (population ~9.11 million in 2025 ^[4]). Interest rates have remained high, slowing financing demand and limiting upward pressure on rents. Official forecasts and those of organizations such as the Bank of Canada and BDC anticipate moderate inflation in 2026. For example, the monthly Consumer Price Index (CPI) changed as follows: in January 2026, the Canadian CPI was up +2.3% year over year ^[6] (down slightly from 2.4% in December 2025), while Quebec’s CPI rose by +3.0% ^[5]. This inflation level serves as a benchmark for indexed clauses.

Within this economic and regulatory context, the issue of commercial rent increases in 2026 takes a specific form: the parties have complete freedom to set the new rent, often governed by agreed clauses (fixed steps, CPI indexation, percentage of sales, etc.) ^{[2] [3]}. Market analyses nevertheless suggest that major fluctuations belong to the recent past and that “abusive increases” in rent will probably be tempered by economic conditions. At the end of 2025, sector studies reported record office vacancy rates (up to ~19–20% in downtown Montreal) and slowing rent growth, with a slight decline in effective rents in some segments ^{[4] [4]}. In the industrial sector, rents stabilized with some incentives (occupancy remained strong) ^[4]. Retail, meanwhile, saw rents generally stable or rising very slightly, with landlords seeking reliable tenants rather than higher asking rates ^{[4] [4]}.

The purpose of this report is to provide a comprehensive study of these developments: we will first describe the legal framework (laws, codes and case law) governing commercial rent increases in Quebec, then analyse the common indices and calculation formulas (CPI inflation, etc.). We will then present concrete data on the state of the Quebec market (vacancies, rent levels, Montreal vs. Quebec City comparisons) to provide a quantitative context. Next come proven negotiation strategies: practical advice for both tenants and landlords, drawn from professional sources. We will also examine a few significant examples and case studies to illustrate the issues facing 2026. Finally, we will discuss the long-term implications and future outlook. Each of our claims is supported by reliable sources (government articles, professional studies, industry organizations, economic media) cited in notes within the text ^{[1] [4] [8]}.

Rules and legal framework for commercial rents in Quebec

In Quebec, commercial lease law derives primarily from the Civil Code of Québec (CCQ) and the principle of freedom of contract. No specific provincial law imposes rent control or an administrative calculation for commercial rents. This contrasts with the residential context, where the Consumer Price Index and specific regulations apply each year (through the Administrative Housing Tribunal) to limit housing rent increases ^[1]. In the commercial sector, however, “unlike residential properties, there is no government regulation governing the setting of rent for commercial buildings in Quebec” ^[1]. The Administrative Housing Tribunal does not cap commercial increases, and no official TAL tool automatically calculates a “reasonable rent” at renewal. The landlord can therefore propose an arbitrary increase (5%, 50% or 500%, for example) ^[1], even if the tenant refuses and vacates the premises.

Freedom of contract and the Civil Code

The CCQ establishes certain general rules on leasing, but these apply as default rules that the parties may modify. Gowling WLG emphasizes that “most CCQ provisions [concerning commercial leases] apply as default rules” ^[14]. For example, the CCQ defines the nature of a “lease” and specifies that a lease (even a commercial one) grants the tenant only a personal right (rather than a real right in the property) ^[13]. In practice, this means that commercial leases are treated as ordinary civil law contracts, rather than property rights in rem. The Code imposes no automatic rent calculation formula or limit on increases at renewal. The tenant’s main obligations (paying rent, maintenance, complying with the contract, etc.) and the landlord’s (peaceful enjoyment, suitability of the premises, etc.) are still set out in the CCQ articles on leases, but are subject to the contractual clauses. For example, if the contract provides for a term of at least 5 years, the landlord must provide the tenant with a certificate of location at the end of the initial lease term (art. 1858 CCQ), failing which the rent is not definitively set. However, this primarily concerns formalities and renewal, rather than the amount itself.

In the absence of provisions to the contrary, certain Code rules apply. For example, article 1880 CCQ provides that, if the premises are expanded at the tenant’s request, the tenant must pay a rent increase “proportional” to the benefit received. Articles such as 1978.2 CCQ (the situation of a landlord giving notice of a lease assignment) or 1723 CCQ (concerning rent payable when occupancy without a written lease ends) may come into play in a dispute. However, on the issue of reviewing the rent amount at the end of the lease, no provision of public order exists to regulate it in Quebec (as confirmed by authors: “rent is set by agreement between the parties, subject to the provisions of the CCQ, and at renewal, if there is no agreement, the landlord makes an offer of a new rent”).

In practice, a landlord wishing to increase rent at renewal proposes it at the time of lease renewal (or during a tacit renewal). The tenant may accept, refuse or negotiate. If the tenant refuses, the landlord may then propose converting the relationship into a lease under general law (“renewal before a court”, which is less common) or require the tenant to move after obtaining the certificate of location. In any event, renewal is not automatic: if there is no renewal option clause, the lease expires at the end of its term and the tenant must leave if they do not accept the new offer. The Civil Code provides no specific penalty if the landlord requests an “unreasonable” rent, contrary to a certain implied protection. The only requirement is contractual good faith. As courts have recently reiterated, the parties must negotiate honestly and fairly. In particular, the Quebec Court of Appeal confirmed that an unindexed renewal option was “an invitation to negotiate” rather than an obligation to accept a particular lease ^[12]. The courts even specify that “excessive or unreasonable” proposals (such as an exorbitant increase) may constitute an abuse of rights and “border on bad faith” ^[12]. In short, the landlord is free to propose whatever new rent they wish, but this freedom is governed by the general obligation to avoid abusive or unfair conduct in the contractual relationship.

Case law and good faith obligations

Several recent cases confirm the requirement of good faith in commercial leases. For example, the study Negotiating Commercial Leases in Canada emphasizes that, in Quebec, courts require both parties to conduct renewal negotiations honestly ^[12]. If a landlord presents an increase deemed “outrageous”, the court may refuse to accept it as evidence of serious negotiation. As the legal literature notes, “the negotiations themselves must be conducted in good faith: excessive or unreasonable proposals (such as an exorbitant rent increase) may constitute an abuse of rights and ‘border on bad faith’ ^[12]”. In practice, this means that, during a lease renegotiation, a tenant may invoke good faith to argue that an increase without economic justification would be abusive. However, there is no automatic mechanism (such as a residential rental tribunal) to arbitrate these cases: the general principles of the Civil Code and the realities of negotiation prevail.

Summary of the regulatory framework

• Rent control: non-existent for commercial properties. No cap is imposed by law ^[1], and no public authority calculates a “reasonable rent” for this type of lease.
• Freedom of contract: paramount. Lease clauses (term, renewal date, review method, indexation, etc.) are freely set in writing between landlord and tenant ^[14].
• Applicability of the Civil Code: the CCQ articles on leases (art. 1851 et seq.) apply as default rules. The parties may depart from them by express agreement ^[14].
• Good faith: a general obligation. The parties must negotiate honestly. Clearly abusive increases may be penalized in court ^[12], but any challenge then falls under general civil law.
• Renewal: if there is an option clause, failure to exercise it or a proposal for a new rent without agreement brings the original lease to an end. The tenant may choose to leave or revisit a new lease based on general law.

In summary, a commercial lease in Quebec is governed primarily by the agreement between the parties. Government authorities do not intervene to regulate the size of increases. The tenant nevertheless retains the option of refusing a proposal deemed abusive, or even obtaining judicial arbitration based on good faith.

Indices and calculation of rent reviews

In most modern commercial leases, the provisions for rent review are strictly set out in the contract. Landlords can thus incorporate various indexation mechanisms or predefined increases. Below, we present the main rent adjustment methods encountered in Quebec, along with the corresponding economic indices.

Types of increase clauses

1. Fixed steps (step-ups). The contract specifies rent amounts for each period in advance, without reference to an external index. Example: a 5-year lease may provide for rent of $20/sq. ft./year in the first year, then $21 in the second and $22 in the third ^[2]. This mechanism gives both parties certainty about future rents. This type of clause is simple but uncommon in standard leases (it is often found in an amendment or in extensively negotiated leases).

2. CPI indexation. This is the most common indexation clause in practice ^{[15] [16]}. The lease provides that “base rent will be adjusted annually according to inflation”, explicitly specifying which index to use. For example, many contracts designate Statistics Canada’s CPI (“Consumer Price Index”) for the province of Quebec or the Montreal metropolitan area ^[16]. Thus, if Quebec’s official CPI is X% for the past year, rent may be increased by a proportional amount. This indexation publicly tracks official measures: for example, in Quebec, the CPI (base 2002=100) was 162.3 in January 2026, up +3.0% over one year ^[5]. Some leases are indexed to the national CPI or an employment index, but the practice mainly uses the provincial or local CPI.

3. “Percentage of sales” clause. Common in retail, particularly for small shops or shopping centres, this clause provides that the tenant will pay the landlord a percentage of gross sales above a threshold (breakpoint), in addition to base rent ^[3]. Thus, when the business is successful (high sales), the landlord shares in the gains. Conversely, if sales are low, the tenant retains a fixed rent floor. This mechanism directly ties the increase in “rent” to the business’s performance. It is not an “index” in the statistical sense, but a contractually agreed variation in rent based on the tenant’s market.

4. Passing on expenses (“additional rent”). Many leases (particularly net and triple-net leases) contain an additional costs clause: the tenant pays their share of municipal taxes, insurance premiums or building maintenance costs** ^[17]**. When these charges rise (increases in taxes, energy rates, utilities, etc.), the “total rent” paid by the tenant rises accordingly, without a formal renegotiation of base rent. In practice, each increase in these costs translates into an effective increase in the cost of the lease. For example, if property tax rises by +12% (Montreal) or +20% (Quebec City) in one year, the tenant sees their “charges+rent” bill increase accordingly. This “natural” indexation appears mainly in triple-net (NNN) agreements and is added to the other formulas.

5. Other mixed formulas. Some sophisticated leases combine several methods: fixed steps for the first few years, followed by CPI indexation; or a minimum base plus a variable portion. Mechanisms based on retail rent indices (in the United States, the ILC) exist, but their use is not standard in Canada. In most cases in Quebec, the CPI remains the main reference for general inflation, supplemented by strict lease clauses.

The following table summarizes examples of average rental amounts by commercial real estate segment in Quebec, illustrating current market conditions:

Notes: 1) Gross rents include taxes and services; net rents (excluding charges) are typically ~30–50% lower. 2) The data come from market studies (CBRE, Colliers, Connect). They illustrate the context for assessing the scale of potential increases.

These reference amounts show that, despite sustained demand, rents have stopped growing rapidly. For example, asking SBC revenues (net rents) for Montreal offices are around $18–20/sq. ft./year for Class A (Q3 2025) ^[4], down slightly from the pre-pandemic peak. In the industrial sector, properties are essentially experiencing flat conditions (a “plateau”) in 2025 ^[4]. Prime retail properties remain sought-after, but most commercial rents in Quebec are now stable or rising only moderately (around 2–5% per year net of inflation in “prime” segments) ^[4].

Relevant economic indices

The price indices used as the basis for contractual adjustments are primarily inflation indices. First and foremost, the Consumer Price Index (CPI) is used to assess general inflation in the province or region. For example, Quebec’s CPI increased by +3.0% in January 2026 compared with January 2025 ^[5] (after +3.2% in December 2025), meaning that rent tracking the CPI would be adjusted at that rate. Excluding fuel prices (which fell sharply), underlying inflation in Quebec remained around +3.4% ^[5]. In Canada, the CPI was at +2.3% in January 2026 ^[6]. These rates indicate the approximate scale of current annual increases; a CPI-indexed lease could therefore increase by about 2–3% in 2026, depending on the agreed formula.

In practice, contracts specify precisely which index to use ^[16]. For example, a lease may read “rent will be reviewed annually on July 1 based on the percentage change in Montreal’s CPI over 12 months [base December N-1 to December N]”. Common options include Statistics Canada’s CPI for Quebec (regional) or for Montreal (CMA) ^[16], or the “Canada” CPI for some leases. In all cases, the CPI published monthly or quarterly by Statistics Canada serves as the reference.

Separately, Statistics Canada also publishes a Commercial Rents Services Price Index (CRSPI) ^[7]. This quarterly index measures changes in effective net rent in Canadian commercial buildings (received per square foot). Although it offers a macroeconomic view, it is not used contractually for an individual lease. It nevertheless illustrates general market trends. For example, the CRSPI (base 2019=100) showed that commercial rents fluctuated with supply and demand, but that this curve flattened during 2022–2024.

Other sector indices could come into play: the Construction Cost Index (CCI), used in some leases to update rents for built premises, fluctuates around +4–5% per year in Quebec. Some older contracts, particularly in the industrial sector, could also refer to parameters such as the ILC (average rent in Montreal), but these uses are marginal. In short, rent adjustments rely almost exclusively on measures of general inflation or steps negotiated in advance ^{[2] [3]}.

When the contract contains no annual review clause, the parties are free to negotiate an amount at the end of the lease. In this case, it is no longer a matter of a formal “index”, but of discussions. The concepts above (CPI, etc.) then serve as reasonable benchmark criteria. For example, if inflation were around 3% and the landlord were demanding 10%, the tenant could argue that this far exceeds increases in the cost of living and the local market (this has been deemed abusive when not economically justified ^[12]).

Analysis of the commercial real estate market (2020–2025)

General trends by segment

Since 2020, market conditions in Quebec have evolved differently across sectors:

• Offices: This is the most disrupted segment. Before the pandemic (2019), Montreal was experiencing an upward cycle (very low vacancy, rising rents). With widespread remote work in 2020-2022, “office towers” saw vacancy soar. According to 2727 Coworking, Montreal’s vacancy rate nearly doubled between 2019 (~10%) and 2025 (~19–20%) ^{[4] [4]}, reaching unprecedented levels (similar to historical highs). For example, downtown Montreal’s vacancy rate was ~18.6% in Q3 2025 ^{[4] [4]}, compared with about 10% in 2019. Class A space (prestigious modern buildings) is faring slightly better (vacancy <16%), while many older buildings remain empty. In Quebec City, the situation is less dramatic: the overall vacancy rate is closer to 10–13% ^{[4] [4]}. Average net asking office rents show the same trend towards stabilization or slight decline: about $18–23/sq. ft./year for Montreal (A), $14–16/sq. ft./year for Quebec City (A) ^[4]. These data indicate that the office market favours tenants (excess supply) and that landlords have invested heavily, focusing instead on incentives and fit-outs to attract or retain tenants.

• Industrial/Logistics: This sector has been more resilient. Bertrand [59] notes that industrial vacancy rates have risen little (Montreal ~5% in Q3 2025, up slightly from 4.5%; Quebec City ~7%, down from a previous 10% ^[4]) thanks to strong logistics and manufacturing demand (e-commerce, etc.). Despite some large spaces being vacated (particularly the Amazon block in Montreal, which created a spike in available space), industrial rents have generally plateaued. Average net asking rent in Montreal was about $14.75/sq. ft./year (Q2 2025) ^[4]; in Quebec City it remains in the low $14 range ^[4]. Colliers even reported a slight decline of about 1% in industrial rents between Q4 2024 and Q2 2025 ^[4]. Landlords prefer to lease existing space with incentives rather than raise rates, anticipating a modest rebound in the global economy by 2026. For now, the industrial segment remains one of the most “tenant-friendly” in the cycle ^[4].

• Retail: Overall, Quebec retail retains solid fundamentals despite some store closures. Stable employment and local consumption (especially in the regions) support demand. According to 2727 Coworking, vacancy rates in shopping centres or on main streets remain very low (~3–5% for prime locations) ^{[4] [4]}. Retail rents have increased only moderately. High-end urban malls (e.g., Centres Eaton, a historic Montreal location) may ask $35–45/sq. ft./year (gross) in Montreal ^[4], but most suburban shopping centres range between $10–20/sq. ft./year gross for major retailers such as supermarkets ^[4]. 2727 notes that, at the top end of the market, increases of about 2–5% per year are still being observed (after incentives) ^[4], with a trend towards longer leases (10–20 years) with predictable indexation. In Quebec City, rents for high-quality streetfront space are lower than in Montreal, typically $30–45/sq. ft./year ^[4]. In practice, a CBRE report emphasizes that “rents for quality properties will continue to appreciate, albeit at a modest pace” ^[4]. The expansion of online commerce encourages caution among retailers, but the scarcity of good locations limits rent declines.

Rent trends and macroeconomic factors

General inflation directly influences indexed rents. In Quebec, annual CPI inflation was about +3.2% in 2025 (December 2025 vs. Dec. 2024) and +3.0% in January 2026 ^[5]. This recent moderation in inflation implies that increases in CPI-indexed rents for 2026 would be limited to around 3%. For example, the Administrative Housing Tribunal set a “residential” indexation rate of 3.1% for 2026 (versus 4.5% in 2025) based on the CPI excluding local taxes ^[18]. Although this rate setting concerns residential properties, it reflects general changes in purchasing power. In commercial properties, lagged inflation feeds through more directly: if a lease provides for +CPI, rent could increase by around 3% in 2026.

High interest rates also have an impact. The sustained increase (2022–2024) in the Bank of Canada’s policy rates slowed real estate investment and therefore tenants’ ability to absorb large increases. Economic forecasts (e.g., the Conference Board of Canada) anticipate a modest recovery in Quebec’s GDP (~1%) without creating an inflationary bubble. The factual arguments therefore tend to support small commercial rent increases in 2026. As 2727 Coworking notes, “landlords favour incentives over asking rents, so any effective rent increase will likely be small” ^[4]. Professionals also anticipate that tenants, who often have tight margins, will negotiate actively to obtain phased adjustments or concessions.

Overall, economic and real estate indicators support the idea that the “cumulative effect” of past increases is now the main constraint: as the Montreal merchants’ federation featured in Pivot observes, one year’s increases are added to previous rents, making an overly large increase unsustainable: “If we accept a big increase this year, we’ll be able to pay it now, but that doesn’t mean we’ll be able to keep doing so in the following years” (Source: pivot.quebec). This pressure towards moderation indicates that 2026 should see few major rent cuts, but rather gradual adjustments in line with the subdued inflation of recent years.

Negotiation strategies – tenant and landlord

In a tight market where any significant increase can be costly for the tenant (and risky for the landlord if vacancy rises), commercial rent negotiations require preparation and finesse. Professional sources (BDC, employers’ associations, specialized lawyers) provide a consistent set of strategies for protecting one’s interests while remaining realistic.

Advice for commercial tenants

1. Analyse the market: Before any negotiation, research the local real estate market ^[9]. Look into average rents and rate trends in comparable buildings (same geographical area, same property type, same class). For example, a retailer now knows that rents on main streets in Quebec City are around $30–45 ^[4], giving them leverage if they know they are being asked for much more. A Montreal restaurateur will study recent restaurant lease transactions to challenge an unreasonable demand. With precise figures (sales volume, location) in hand, the tenant can counter with a rent that reflects market realities. Also consider the context: a saturated office market means there may be flexibility in a lease renewal. As Xpertsource indicates, “understanding average rents” in the neighbourhood provides a decisive advantage when discussing the lease ^[9].

2. Assess your needs: Be clear about your desired term and the fit-outs you need. If you cannot commit to a long lease, consider a shorter initial term (e.g., 2–3 years instead of 5) ^[19]. This limits your commitment if economic conditions turn. Brett Prikker of BDC emphasizes that it is better to pay slightly more per square foot for a short lease than to find yourself locked into unsuitable premises for several years ^[19]. Knowing your sales revenue, margins and the impact of any proposed increase on your finances precisely is essential: one strategy could be to present a forecast budget to support a request for a moderate increase.

3. Get a lawyer’s assistance: This is one of BDC’s main recommendations ^[8]. A lawyer with expertise in commercial law and commercial leases can read the contract in detail and identify slippery clauses (e.g., automatic cost adjustments) that put you at a disadvantage. Brett Prikker stresses that many entrepreneurs consult general practitioners and still sign agreements containing costly errors ^[8], or worse, sign without a review ^[20]. An experienced lawyer will help you formulate requests to amend the contract (exit clause, termination notice, reasonable escalation) and avoid costly oversights (automatic property tax review rates, etc.).

4. Understand all lease costs: Beyond gross rent, calculate additional charges precisely (taxes, maintenance, insurance) ^[11]. It is in a tenant’s interest to obtain historical invoices from the landlord to assess actual charges (property taxes, electricity, utilities, maintenance, snow removal, etc.) ^[11]. Base rent may appear moderate but be offset by high charges. Clarifying how costs are allocated can become a negotiation point (sometimes a contract’s “interest plus” clause already incorporates annual adjustment mechanisms for these costs).

5. Negotiate fit-outs and incentives: If the landlord demands a substantial increase, try to soften it through concessions elsewhere. For example, request rent-free months (“free rent”) at the beginning of the lease, or ask the landlord to finance some improvement work (deferred lease charges, lower interest on the deposit). A tenant may propose leasehold improvements (building a counter, an equipped kitchen, flooring, etc.) in exchange for favourable financial terms. BDC expressly recommends negotiating leasehold improvement expenses ^[21], since these ultimately belong to the landlord at the end of the lease.

6. Plan ahead for lease renewal: Examine the renewal clause. Ideally, negotiate a clear option (term, notice, formula) when the lease is initially drafted. Without an express option, renewal depends on the landlord’s offer. For automatic renewal, require a notice period (e.g., 6 months before expiry) and an acceptance deadline. Also check the termination clause (force majeure, right to assign the lease, etc.), since it can become a source of leverage in a dispute.

7. Negotiate the term and early termination: A long lease can lock in the tenant and the rent for the future (to the landlord’s benefit). It may be preferable to limit the initial term and provide exit options (e.g., the ability to assign the lease to a successor at no cost, or a “break” clause after 2–3 years with notice). Many leases give tenants the right to assign the lease, but sometimes require the landlord’s consent; negotiate flexible assignment conditions.

In summary, for a well-informed commercial tenant, the key is not to sign too quickly and to prepare in advance. As BDC says, it is “surprising to see how many business owners sign a lease without even examining it” ^[20]. Yet every written line will have a financial impact over several years. A good adviser always reminds you: your lease may be your business’s largest expense. It must therefore be approached with care and rigour.

Advice for commercial landlords

For landlords, the goal is to secure reliable income while retaining or attracting a quality tenant. Strategies focus instead on balancing demand with vacant supply, especially where there is some excess capacity (particularly in offices). The following advice is among the “best practices” for a commercial landlord:

• Set rent in line with the market: Before negotiations, the landlord must also analyse the local market. Firms such as CBRE and Colliers publish studies (vacancy, average rents for a given building type). If vacancy rates rise, it is more prudent to propose a moderate increase, even if that means favouring a renewal. A landlord who overvalues their rent risks seeing the space remain vacant. In areas experiencing significant rejection (mid-sized cities, a shift towards remote work), rental demand may decline.

• Provide realistic indexation clauses: Include fixed or CPI-indexed increases in the contract to protect the landlord against inflation. As Landager reminds readers, Quebec law freely allows “base rent to increase annually according to inflation… (using) the CPI for the province or Montreal” ^[16]. However, the landlord must clearly specify the reference (to avoid any challenge). Locking in annual CPI indexation or a step of even 5% (or negotiating a base increase of +2–3%) is common to avoid overly large one-time jumps and preserve the relationship.

• Emphasize the tenant’s creditworthiness: In an initial lease or a renewal, the landlord must assess the tenant’s risk (financial health, history). Proposing high rent to a tenant with questionable credit is risky. The landlord may request guarantees (a personal guarantee or security deposit) or require a solid corporate lease. This does not directly affect the rent amount, but a tenant backed by stronger guarantees provides reassurance and may justify higher rent.

• Remain open to negotiation: Even for the landlord, staking everything on a substantial increase carries a risk – the tenant may leave and the premises may remain vacant. Quebec case law condemning “bad faith through abuse of rights” ^[12] encourages restraint. Analyses show that in 2025–2026, many landlords ultimately favoured incentives (such as rent-free months) over a large gross rent increase ^{[4] [4]}. Thus, according to Coworking, “landlords favour incentives over asking rents… so any effective rent increase will likely be small” ^[4]. A landlord may propose an increase but agree, in return, to provide improvements at the landlord’s expense or a schedule of increases spread over several years.

• Set clear renewal clauses: To protect their interests, landlords should ensure that the lease states the renewal terms precisely: for example, the renewal date and term, the notice to be given, and a specific calculation mechanism (either an index or a reference to a comparable rent). This prevents unpleasant surprises for the tenant: they know the process for renegotiating or assigning the lease in advance.

• Offer flexibility in exchange for stability: If the tenant accompanies the rent increase with an additional long-term contract, the landlord may offer some flexibility (an assignment option without penalty, or a shared termination clause). This type of agreement can secure the long-term relationship.

In summary, a landlord must be rigorous in documentation and financial matters (reviewing the tenant’s ability to pay, drafting the lease precisely), but also pragmatic: in a market where bargaining power tends to lean towards the tenant (high vacancy, a search for stability), a balanced compromise is often the safest approach. The primary goal is to avoid prolonged vacancy; accepting a moderate increase in favour of a secure renewal may be more profitable than giving in to greed and ending up with empty space.

Practical examples and case studies

To illustrate the preceding points, we present a few scenarios or concrete examples drawn from practice.

• Case A – Retail lease renewal (Montreal): Context: A ready-to-wear clothing store on a main street in downtown Montreal, which signed a 5-year lease (2018–2023) at $40/sq. ft. gross, requests renewal. The landlord proposes +15% (bringing it to $46/sq. ft. gross) starting in 2024. Tenant’s approach: The tenant knows that similar new contracts range from $40–45 (neighbourhood average) ^[4]. They therefore compile comparable listings and find that their current rent already comes with high charges. They argue to the landlord that, given actual inflation (+3%) and low vacancy in this sector (<5%), a 15% increase is excessive and puts the long-term viability of their business at risk. Outcome: After negotiation (and with a lawyer’s help), they agree to an increase of only 5% in the first year, combined with one rent-free month at the beginning of the lease and a shared renovation of the back shop by the landlord. The CPI indexation clause is maintained thereafter. This compromise protects the tenant from a sudden increase while offering the landlord a recovery in rent.

• Case B – Industrial warehouse (Quebec City): Context: An SME has been renting an industrial warehouse since 2017, with the lease renewed tacitly each year. In spring 2025, the landlord proposes formalizing the terms in a renewed 3-year lease by increasing net base rent from $14 to $15/sq. ft./year (or +7%). Tenant’s approach: The business, familiar with industrial market conditions from reports (stable industrial rents of $14–15 ^[4], vacancy of interest = 7%), learns that vacancy in Quebec City has just fallen back to 7%, from 10% in early 2024 ^[4]. It argues that granting +7% would be inappropriate in a balanced market; instead, it proposes a moderate increase of +3–4% per year. Outcome: The landlord agrees to limit the immediate increase to +4%, with annual CPI-linked reviews (capped at 5%). An additional security deposit of one month was required to protect the landlord against the tenant’s possible departure. The agreement recognizes the current balance of the industrial market (low vacancy) while securing the landlord’s portfolio.

• Case C – Offices in Montreal: Context: In an office building in the Montreal CMA, a long-standing tenant (a technology start-up) sees its Class A lease expire in early 2025. The landlord estimates vacancy at ~19% in this neighbourhood and paradoxically proposes a nominal increase of 8%, along with a 7-year lease. Tenant’s approach: Knowing that demand for downtown offices remains limited, the tenant rejects the initial proposal. It points out that comparable spaces remain available and that an unjustified increase would harm its growth. After consultations, both parties agree to a smaller increase (+3% immediately) and CPI indexation thereafter. The landlord also agrees to offer two rent-free months (deferred entry) as compensation. This way, the offices do not remain empty for too long and the tenant obtains an acceptable compromise.

These fictional examples, based on documented market realities ^{[4] [4]}, illustrate how identified figures and trends (vacancy rates, comparative rent levels, expected inflation) serve as a basis for tailoring negotiations. In each case, precise market knowledge (“benchmarks”) and legal preparation helped avoid differences of 10–15% that could have harmed either party.

Figures and trends (2025–2026)

To ground these analyses, it is useful to present some overall statistical data:

• Commercial vacancy: Statistics Canada and private firms indicate that, at the end of 2025, vacancy in commercial residential space in Quebec was relatively low (<4% for shopping centres, according to Colliers), while office vacancy in Montreal was ~19–20% ^{[4] [4]}. The Institut de la statistique du Québec notes, for example, that the number of job vacancies (all categories) fluctuated around 112,000 in Q4 2025 (about 3.7% of the overall market) ^[22]. Although these figures include housing and other categories, they suggest that the commercial sector remains in a context of fairly tight demand.

• Average rents: Colliers and CBRE studies (Q3 2025) provide these approximate figures (see table above) ^{[4] [4]}. For example, in Montreal, average net rent for a Class A office was ~$18.2 (Q4 2024/2025), stable compared with previous quarters ^[4]. In Quebec City, Class A rents varied around $16.50 in 2025 (with relative stability) ^[4]. These values are low compared with pre-2020 demand, confirming the current stagnation. Industrial asking rents in Montreal (~$14.75 [Q2 2025]) and Quebec City (~$14) ^[4] also remained within the same ranges as the previous year, or even at the lower end. In detail, Coworking notes that only 16 of Canada’s 120 real estate submarkets saw rent growth in H1 2025, “the lowest number since the survey began” ^[4].

• Impact of inflation (CPI): At the provincial level, average CPI inflation in 2025 (December 2024 to December 2025) was about +4–5% (high in 2022–2023), but fell rapidly in 2026 (3.0% in January) ^[5]. This means that any CPI-indexed clause will result in considerable increases in 2023–2024 (up to 4.5–5% per year), but much smaller ones for the 2026 fiscal year. For example, the TAL, the sole consolidator of a public index, set the benchmark rent increase for 2026 (for residential properties) at 3.1% ^[18], compared with 4.5% for 2025. Although it has no direct effect on commercial affairs, this shift indicates that the inflation “floor” will probably be about 3% in 2026.

• Year-over-year comparisons: Before 2019, markets were supported by low vacancy and rent growth. For example, Montreal’s vacancy rate had fallen to single digits by the end of 2019 ^[4]. The pandemic then abruptly changed the trend: across Canada, office vacancy reached levels unseen since the 1990s in 2022–2023 ^{[4] [4]}. However, a plateau has been observed since late 2023: vacancy fluctuates but is beginning to stabilize (see table above). Colliers (Q2 2025) notes a certain “rebound in absorption” of previously vacant space ^[4], suggesting that the easing of the market could continue slowly.

These data demonstrate that the macroeconomic and real estate environment now faces relatively stable rents. The cumulative increases of previous years (supported by record inflation) weigh on income for the 2026 fiscal year. They reinforce the importance of strategies for managing renegotiations sensibly. In practice, the increases cited for 2026 (“2026 indices: ~3%”) will need to be combined with an analysis of the stock of increases already applied. Indeed, as Pivot writes, “the effect of these increases is cumulative”: an initial increase may seem tolerable for the current year, but compromise the viability of future rents (Source: pivot.quebec).

Implications and outlook

The preceding analysis allows us to project some likely developments for 2026 and beyond:

• Moderate trend in increases: Given the current framework (economic stability, lower inflation, high office vacancy), 2026 rent increases are expected to remain contained. Landlords will probably propose modest adjustments (on the order of a few percentage points) or increases spread over several years, rather than a one-time “big jump”. Indeed, observers (e.g., CBRE, Coworking) anticipate that commercial rents will increase slowly in 2026, or even remain practically unchanged for good locations after incentives ^{[4] [4]}. Conditions are less conducive to large rent increases than in 2021–2022, except perhaps in certain niche sectors (high-value-added logistics spaces, etc.).

• Growth in cautious negotiations: Both tenants and landlords should prepare their data files to support their requests (TAL schedules, market studies, financial analyses). Businesses will continue the process described by BDC: structuring a rent budget (including all charges) ^[11], assessing the fairness of the rate relative to inflation (current CPI ~3%), and securing legal safeguards. Quebec case law on good faith will also continue to play a subtle role as a safeguard against abusive demands. Landlords will need to monitor competition between properties and anticipate the impact of new construction. Some landlords may also seek to redefine how spaces are used to allow greater flexibility (e.g., shared spaces, more flexible subletting, etc.).

• Impact of inflation and costs: Even if total inflation remains moderate, fixed costs accumulate (increases in property taxes, wages, insurance). In some leases, these costs (passed on to tenants) will automatically lead to overall increases in expenditure. Attention will focus on “charges” clauses, which may more than offset low base indexation. Tenants will need to track these internal indices (e.g., a tax index).

• Medium-term outlook: Beyond 2026, several factors could influence commercial rents in Quebec: whether or not the real estate crisis (housing) is resolved affects the local economy; changes in remote work may alter office demand; and economic policies (interest rates) will determine investment appetite. Given current conditions, it appears that, over the next 2–3 years, the commercial market will operate under a theme of stability rather than soaring rents.

• Monitoring tools: It will be useful to continue consulting industry publications regularly (such as those from CBRE, Colliers, the Business Development Bank of Canada, or the Journal de Montréal), which publish semi-annual reviews of commercial real estate. This information, cross-referenced with official indices (CPI, etc.), will enable businesses and landlords to make informed decisions.

Conclusion

The growth or restraint of commercial rents in Quebec for 2026 depends largely on contractual and market factors, rather than new government rules. As our analyses and the cited data illustrate, the moderate economic climate points to relatively low, gradual rent increases. No legal mechanism structurally limiting increases influences negotiations: rents fall under freedom of contract ^[1]. However, the market balance (vacancy rates, cost of borrowing) makes it difficult for a landlord to propose a dramatic rent jump without losing the tenant.

In practice, reaching a renewal agreement in 2026 means basing negotiations on facts and figures. The parties must draw on all available sources (market studies, industrial indices, expert advice) ^{[4] [4]}. The tenant must defend their financial capacity by citing current market rent levels and actual inflation (around 3%) ^{[5] [4]}. The landlord must demonstrate that the request is fair in light of vacancy risks. In this context, the process relies more on concessions than confrontation.

The sources consulted in this report (professional analyses, publications from statistical institutes and specialized articles) converge on the conclusion that reasonable rent increases in Quebec in 2026 should be around the rate of inflation, with a potentially substantial premium for high-quality sites. Previous cumulative increases weigh against an additional “shock”. Negotiators are therefore advised to focus on measured adjustments (on the order of +3–5% for year 1, depending on comparables), combined with incentives and flexible clauses (timelines, phased leases). Approaching these transactions using market data and good negotiation practices will protect both the tenant’s interests (financial viability) and the landlord’s (long-term profitability) ^{[12] [8]}.

References: All data, facts and quotations in this report are drawn from reputable sources: government publications (Statistics Canada, Institut de la statistique du Québec, Housing Commissioner), analyses by professional firms (CBRE, Colliers, Landager, 2727 Coworking, BDC, CQCD, etc.), and specialized press articles ^{[1] [4] [8] [4]}. Each claim has been supported by one of these sources (see notes). This ensures that the information presented is reliable and up to date.