Montréal - In its Real Estate Market Research study published today, Newmark Knight Frank Devencore reported that availability rates in downtown Montreal will likely climb over the next year with at least three new projects reaching the final stages of construction. Some of the larger tenants in Montreal are relocating to these state-of-the-art developments, which could free up sublease space in the buildings they have vacated.
"Office development and condo construction in downtown Montreal are at a level not seen in nearly two decades," said Jean Laurin, President and CEO of Newmark Knight Frank Devencore. "After a number of years of subdued economic growth, the city is regaining much of its cachet and beginning to draw increased attention from both national and international corporate tenants representing a wide range of business sectors."
The availability rate in downtown Montreal for all office classes was 11.9% at the end of 2016, down nearly 1.0% year-over-year. Over a million square feet of new Class A office space has come online in downtown Montreal over the past three years, and an additional 838,000 square feet is scheduled to be delivered by the end of 2017.
Despite the high availability rate, bigger tenants--those seeking spaces larger than 100,000 square feet--have a limited number of options, the report states. Tenants requiring less space, however, have more opportunities.
"The best deals are building specific: landlords losing tenants to the new towers will be increasingly aggressive in marketing their buildings, and tenants with strong covenants will have more leverage in negotiating inducements," Mr. Laurin said.
Mr. Laurin also noted that current conditions have led some tenants to re-examine their office space priorities.
"Given the relative abundance of leasable space, it is also interesting to note that a number of companies are examining new ways of not simply optimizing space, but of optimizing productivity," Mr. Laurin said. "In many cases, doing so means considering not only costs, but also strategies to provide an environment for the workforce that encourages greater dynamism and efficiency."
To read the complete market study, please follow this link.
About Newmark Knight Frank Devencore
As part of Newmark Grubb Knight Frank, one of the world's leading commercial real estate advisory firms, Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage, exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution. To learn more about our capabilities, please visit www.devencorenkf.com
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