Demand Outstrips Supply for Spaces with Modern Features
MONTREAL, QUÉBEC - Devencore today announced that the overall availability rate for industrial space in the Greater Montreal Area (GMA) was at 6.1% at the end of 2017. Estimated net asking rents have remained unchanged over the past twelve months, and currently average $5.91/SF. Rents have remained stable largely because of the quality of the available inventory, which generally falls into the Class B and Class C categories.
"While there are no major speculative developments underway, a number of businesses are in the process of building new facilities," said Jean Laurin, President and CEO of Devencore. "Molson Coors recently announced it is planning to move into a new $600 million facility in Longueuil, Ikea is constructing a one-million-square-foot distribution centre in Beauharnois, and Costco is investing over $100 million in a 550,000-square-foot distribution centre in Varennes.
"Economic growth in the GMA is being generated by a number of industries, including warehousing and logistics, tourism, construction (as significant parts of the city's infrastructure are being updated), technology and the service sectors," Mr. Laurin added.
The report notes that the market offers sufficient leasing opportunities for tenants seeking spaces with contiguous footprints of 10,000-square-feet or less. However, much of this inventory is dated by modern standards with lower clear heights (24 feet or less) and smaller loading areas. Conversely, tenants who require larger footprints and modern amenities including higher clear heights--28-foot-clear heights are now considered a minimum--have very few options, as demand far outstrips supply. This presents a particular challenge for the burgeoning e-commerce, warehousing and logistics sectors, which need this more modern type of space.
In the coming months, there will be an increase in industrial construction activity as the large-scale built-to-suit projects get underway," Mr. Laurin said. "However, the amount of available industrial stock will likely remain stable for the foreseeable future, and the market should retain its landlord/tenant balance. The best opportunities are submarket and building specific, so tenants and their advisors must be prepared to analyze both the market and their needs thoroughly."
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As part of Newmark Knight Frank, one of the world's leading commercial real estate advisory firms, Devencore is the largest privately-owned corporate real estate advisor and broker in Canada. With offices across the country, 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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