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Montreal Office and Industrial Markets Down but Starting to Stabilize, Report States
(MONTREAL, QUEBEC) -- Montreal central business district and suburban office and industrial markets had a mediocre 2009 but are expected to show improvement in 2010, according to a new report by Newmark Knight Frank Devencore.
Canada's largest corporate real estate advisor and brokerage found:
- Vacancies in both office and industrial markets are up.
- Asking rents remain relatively steady.
- Tenant and developer activity was modest but didn't come to a standstill.
- All big development projects were put on hold in 2009.
- Tenants either retrenched or postponed expansion plans.
- Tenants more interested in space of less than 30,000 square feet.
- No fire sales yet as landlords and owners begin to show more flexibility in doing deals.
As the effects of the global economic crisis gradually eased towards the end of 2009, the Montreal markets began to show signs of stabilizing.
Jean Laurin
"While overall vacancy rates in both the office and industrial markets rose during the year, the increase was not nearly as dramatic as that experienced in many other major cities in the country," says Jean Laurin, president and CEO of Newmark Knight Frank Devencore.
"Indeed, the market study reveals that asking rental rates remained relatively steady, though there were slight declines in some industrial real estate sectors
"Additionally, while it was generally the case that both tenant and developer activity was modest, it did not come to a standstill."
"There is a sense among landlords, developers and many of our clients that the economy is regaining a firmer footing, and a cautious optimism may begin to take hold through 2010," says Laurin.
He says, "This is good news, as growth was slowed considerably through 2009. In the office market, virtually all significant development projects were put on hold and we saw tenants either retrenching or simply postponing expansion plans."
Leasing activity in the suburban Montreal's industrial sector was also relatively modest through the end of 2008 and much of 2009.
"There was generally more tenant interest in spaces of less than 30,000 square feet, and the boost in overall vacancy rates were largely driven by the increased availability of larger industrial spaces-those exceeding 75,000 square feet-which were vacated by a handful of businesses that downsized significantly," says Laurin.
"Given that vacancy rates have risen and asking rental rates have remained stable or, in some instances, even fallen slightly, this is an excellent time for tenants to take a close look at their real estate portfolios and re-examine their real estate strategies."
Laurin adds, "While landlords and building owners are not conducting fire sales, there is a desire to secure larger tenants with strong covenants and a willingness to exercise some negotiating flexibility in order to do so.
For tenants seeking to expand or relocate, there are more opportunities today than there were a year ago-and probably more than there will be in a year's time when the economic recovery begins to generate renewed growth.
"There are excellent deals to be made, but time-and timing-is of the essence."
Devencore is the Canadian partner of Newmark Knight Frank, one of the largest independent real estate service firms in the world.
Headquartered in New York, Newmark Knight Frank and London-based partner Knight Frank operate from over 200 offices with more than 6,300 employees in established and emerging property markets on six continents.
Last year, transactions were valued at more than $32 billion with annual revenues of over $811 million.
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