Vacancy rates in downtown Montreal are on the rise, according to a report from Newmark Knight Frank Devencore.
The rate is currently listed at 8.6 per cent, up from 8 per cent at the beginning of 2014. Meanwhile, availability rates have also climbed to 16 per cent.
Jean Laurin, president and chief executive officer of Newmark Knight Frank Devencore, lists a number of reasons for the increase.
Not only have new office developments boosted the inventory, but ongoing redevelopment of industrial assets has lured tenants of the creative class and companies seeking cheaper rents in informal spaces.
Also, as tenants relocate to new offices, they are reviewing their occupancy standards.
“Using space more efficiently can translate directly into reducing one’s space needs, and hence lowering occupancy costs over both the short and long term,” said Laurin.
Mr. Laurin also noted that availability rates are at a decade-long high and tenant opportunities are plenty.
“Tenant leverage is also greater, and many landlords are willing to negotiate very competitive leasing transactions,” he said. “However, tenants should recognize that the availability of office space is building specific, so the market must be researched.
He suggests a needs analysis be undertaken, as “the range of options includes new, state-of-the-art tower space, older space, and redeveloped space.”
The report also highlights how new construction across the country has been a factor in mounting vacancy rates in other provinces. More than four million square feet of office space was added to the market in 201.
Vacancy in Class A and B office buildings in Calgary jumped from 4.4 per cent to 6.2 per cent in the last half of 2014, while Toronto, Edmonton, Winnipeg and Halifax are seeing more moderate increases. Meanwhile, rates were unchanged in Vancouver and Ottawa.