Montreal’s downtown office market slowed in the third quarter of 2015, but the suburban market showed more activity, with a vacancy drop from 1.2 per cent to 9.4 per cent, according to a Colliers International report.
Price, affordable rents, and location away from major road traffic and congestion are driving interest in the suburban market. This move is also a direct reflection of how companies are now focused on employee well-being, productivity, efficiency, as well as a work-life balance.
Meanwhile, the office vacancy rates in downtown increased from 1.5 to 6.7 per cent, with 3.3 million square feet available at the end of Q3, compared to 2.5 million square feet in the suburbs. At the same time, Class A and Class B properties in the central business district changed most, with increases of 2.1 per cent and 2.4 per cent, respectively.
“The oversupply of office space in the downtown Montreal market means it is currently a tenants’ market,” noted Andrew Maravita, managing director of Colliers International (Montreal). “With the third quarter inauguration of the Deloitte Tower bringing 495,000 square feet to the downtown market, tenants remain in a good position to improve the terms of their leases, or rent high-quality office space at preferential rates.”
The Q3 report also points out that a reduction in positive absorption in the industrial market slowed, dropping more than 33,000 square feet from Q2 to more than 235,000 square feet. Maravita adds that complex businesses looking for space should be prepared to order a custom build to meet industry requirements. This is due to a large supply of available older buildings under 30,000 square feet and buildings with a workable ceiling height lower than 24 feet.