The Colliers International Q1-2015 Reports for the Greater Montréal Area show a decreased vacancy rate in the commercial office sector while the industrial market’s activity remained relatively stable during the first quarter of this year.
“While the office space market in the Greater Montréal Area started slow in 2015, there is a positive absorption, resulting in a vacancy rate downward from the previous year and an availability rate lower than in Q4-2014,” said Andrew Maravita, Colliers International’s Montréal Managing Director. “Because of an oversupply in the market, current and potential tenants are in a better position to improve the terms of their leases, or rent office space of high quality at preferential rates.”
The office vacancy rate for Greater Montréal dipped slightly to just over seven per cent in Q1-2015 and Colliers International anticipates the office market slowing down slightly in Q2 and Q3, but then accelerating again toward the end of this year. The decline of the Canadian dollar and a provincial balanced budget could bring new players into the market and 2015 could be a robust year for sales.
“The exceptional growth of the office market in suburban Montréal in previous years seems to have quieted, but continues to grow and remain attractive because of prices and affordable rents,” he added.
Montréal’s unique architecture continues to play a significant role in commercial real estate activity. “The central districts of the island of Montréal are known for loft-style buildings, which offer affordable rents and are attractive to companies in the artistic community,” said Maravita. “These buildings can easily be converted into open and flexible administrative offices and are attracting large users to these chic styled lofts.”
The Greater Montréal Area industrial market’s overall vacancy rate dipped below four per cent in Q1-2015, compared to seven per cent just five years earlier, and the economic prospects for this year are rather favourable to the industrial real estate industry in the entire province of Québec.
“We estimate in 2015 that the depreciation of the Canadian dollar, combined with a continued economic recovery in the United States, will result in an increase in provincial exports,” said Maravita. “The transport and storage sectors of the industrial market will benefit greatly from this increase in exports. We anticipate the activity recorded in the industrial market will remain relatively stable in the Montréal area until at least the summer.”
This report sees the market of Ville St-Laurent west of Montréal continuing its expansion and it has the lowest industrial availability rate in the greater metropolitan area at 4.1 per cent. The region displays a strong positive absorption, with a vacancy rate of 2.2 per cent, which is down 0.7 per cent from Q4-2014. The south shore of Montréal has the largest number of major construction projects in Varennes, Beloeil and Saint-Bruno-de-Montarville, while continued population growth in Laval is encouraging large businesses to launch new projects.
The unique nature of the industrial market means continued steady growth and absorption. “We expect buildings with ceilings of at least 24’ and more will always be in demand due to the nature of the business,” said Maravita. “As well as buildings which have an area of more than 300,000 square feet. For these buildings, availability remains lower.”