In its Real Estate Market Study, Newmark Knight Frank Devencore reported that vacancy rates in downtown Montréal's Class "A" and "B" office buildings have fallen to 5.8 per cent. Over the past 12 months, just under 585,000 square feet was absorbed, and there is approximately 2.7 million square feet currently available for lease and sublet. As has been the case for over a year, contiguous spaces greater than 25,000 square feet are increasingly difficult to find.
"Over the past 24 months approximately one million square feet of Class "A" and Class "B" office space has been absorbed, so in this post-recession period there has been considerable leasing activity," said Jean Laurin, president and CEO of Newmark Knight Frank Devencore. "As a result, the dynamic of downtown Montréal's office market is about to undergo a significant shift. Two new tower projects have secured anchor tenants: Deloitte LLP has signed on to the 514,000 square-foot Cadillac Fairview development that will be built between Windsor Station and the Bell Centre; and Aimia, which owns and operates Aeroplan, is the lead tenant in the Tour Aimia, which is part of an office tower and condominium complex under construction in the heart of the Quartier International. Other pre-development activity continues as well, with as many as three or four additional projects seeking anchor tenants before proceeding."
Across Canada, the combined Class "A" and Class "B" vacancy rate fell from 6.8 per cent to 4.7 per cent over the past year. Total vacant space in the country's major cities fell from 11.2 million square feet to 9.8 million square feet. At the same time, the total inventory of built space across the country increased by nearly two million square feet, due in large part to new office towers in Calgary and Toronto, which have both been experiencing a development boom.
"As we noted six months ago, the demand for top-tier space in Montréal has begun to severely limit tenant opportunities, and the two major tenancies we have seen announced over the past six months with Aimia and Deloitte speak to the need for new LEED-certified office space," Laurin said. "These new projects will begin to change the face of downtown Montréal and will certainly generate new leasing opportunities. However, because these projects are 2-3 years from delivery, tenants who have leases coming up for renewal over the next year or so should be strategizing now with their real estate advisors in order to take advantage of current and emerging opportunities. "