The beginning of the end of downtown office problems?

The beginning of the end of downtown office problems?
The beginning of the end of downtown office problems?

Could this be the beginning of the end of the real estate difficulties in city centers? And that of Montreal, more particularly?

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Perhaps, if one relies on the most recent data from real estate agency CBRE, which shows – for the first time in a year – signs of improvement in the office sector of downtown Montreal.

If office vacancy continues to increase, we can see a significant slowdown in the trend. The downtown vacancy rate increased by just 4 basis points (PB) to 10.6%, and the vacancy rate for Class A offices held steady at 8.4% .

Resumption of activity

For Ruth Fischer, new CBRE general manager for the Quebec territory, this is a sign that companies “are starting to consider a return to the workplace as the deployment of vaccines progresses”.

The latter adds that after an anemic year for real estate in downtown Montreal, customer visit requests for prime offices have picked up again for three months in downtown Montreal.

Admittedly, the space offered for subletting continued to grow for a fourth consecutive quarter, to 1.5 million sq. Ft.2, representing 2% of the built inventory in Montreal and its suburbs. But the rate of growth in office sublets is net compared to the quarterly increase of 42.9% recorded at the end of 2020.

In the suburbs, the vacancy rate rose to 16.6%, slightly above the three-year average. This is due to the good performance of the South Shore submarket, which continues to surprise with a stable vacancy rate at 9.6%.

Strong industrial demand

On the industrial side, the demand for storage space continues to stimulate activity in Greater Montreal. CBRE notes a new historic low of overall availability of 1.9% in industrial areas.

Given the scarcity of available industrial space, net rent growth continued to accelerate, by 4.8% since the last quarter, reaching $ 8.10 per sq.2. If maintained, current increases will translate into 20.6% annual rental growth in 2021.

Montreal’s trend is comparable to that of other major cities in the country. CBRE Says Net Absorption Of Industrial Facilities In Canada Has Reached 10.4 Mft2, one of the most important absorptions in the history of the country. Also according to CBRE, if the trend continues, several cities could see their supply of logistics facilities reduced to nil by the end of the year.

TO SEE ALSO | The saga of the new baseball stadium in Montreal at a glance

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