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MARKETBEATOFFICE SNAPSHOTMONTREAL, QUEBEC                                                                                 ...
MONTREAL OFFICE SUBMARKET                          INVENTORY   OVERALL      DIRECT      YTD LEASING           UNDER       ...
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C&W - MONTREAL OFFICE MARKETBEAT - Q4 2012

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C&W - MONTREAL OFFICE MARKETBEAT - Q4 2012

  1. 1. MARKETBEATOFFICE SNAPSHOTMONTREAL, QUEBEC Q4 2012A Cushman & Wakefield Research Publication ECONOMIC OVERVIEW OUTLOOK Economic growth in Canada slowed toward the Although large tracts of vacant space have resurfaced in the end of 2012 as inflation hit its notably lowest downtown area, the anticipated transition will alleviate the shortage level in the last three years. The consumer of direct class A supply – reassured by nearly 750,000 sf of new Price Index in November rose by a meager construction in the Central Area alone. An increase in positive 0.8% year-over-year, as reported by TD absorption is expected, as prospective tenants will welcome stableEconomics, marking a significant downturn from the 1.2% pace rental rates and encouraging options for contiguous class A space.recorded in the last few months. In spite of this stagnancy, Canada The suburbs are also forecasted to maintain high levels of absorption.produced 59,000 jobs in November to drop the unemployment rate With more than 900,000 sf of construction currently under way, weto 7.2%. This degree of job creation, however, will most likely recede expect this level of privately-funded development to continue wellas the public sector continues to face budget constraints in the new into 2013-2014.year. Canada will need to rely heavily on private business and exportsto combat the sluggish fiscal situation and provide modest expansion. STATS ON THE GOAnnual real GDP growth is expected to slow to 1.7% in 2013, though Y-O-Y 12 MONTH Q4 2011 Q4 2012 CHANGE FORECASTbanks anticipate a stronger economic performance in 2014 when theU.S. economy regains momentum. Overall Vacancy 7.9% 7.7% -0.2pp Direct Asking Rents (psf/yr) $14.42 $14.42 0%MARKET OVERVIEW YTD Leasing Activity (sf) 5,288,060 3,911,780 -26.0%Following a strong showing in Q3, Montreal’s commercial real estatemarket leveled off in Q4 as leasing activity relaxed considerably.Overall absorption was a marginally negative 15,000 square feet (sf) DIRECT RENTAL VS. VACANCY RATESdue to several large blocks of contiguous space placed back on themarket. Despite this projected occurrence, vacancy held fairly steady $30.00 10.0%at 7.7% overall and 6.7% direct – aided by a drive in performance $25.00 8.0%from several growing subsectors within the suburban office market. $20.00 6.0% psf/yrCentral Area activity subsided this quarter as all its respective $15.00 4.0%submarkets combined for nearly 180,000 sf of negative absorption. $10.00Direct vacancy remains low, yet climbed back to 5.3% as witnessed $5.00 2.0%two quarters ago. Responsible for the majority of newly available $0.00 0.0%space were the Financial Core and Downtown West submarkets, 2008 2009 2010 2011 2012where several larger tenants, most notably CGI, vacated significant DIRECT GROSS RENTAL RATE DIRECT VACANCY RATEspace. Space consolidation and key tenant relocations within the tightconfines of the Central Area add pressure to both vacancy andabsorption fluctuations in the larger office towers. NEW SUPPLYThe Suburbs outperformed the Central Area yet again in Q4 with 1,000more than 160,000 sf of positive absorption, offsetting the increase in 800Central Area available space and stabilizing vacancy rates across thetotal Montreal market. Suburban overall vacancy fell to 9.5% – a 0.5- 600 sf (thousands)percentage point drop from one year ago – with class A absorption 400activity the primary driver for the declining rates. The Laval and 110 200 84 782 483 357South Shore submarkets were exceptionally active in Q4 as both 0areas garner increased attention, a trend that is expected to continue 2008 2009 2010 2011 2012into 2013. The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness 1 of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2012 Cushman & Wakefield, Inc. All rights reserved.
  2. 2. MONTREAL OFFICE SUBMARKET INVENTORY OVERALL DIRECT YTD LEASING UNDER YTD CURRENT YTD OVERALL WTD. AVG. WTD. AVG. VACANCY VACANCY ACTIVITY CONSTRUCTION CONSTRUCTION QUARTER ABSORPTION ALL CLASSES CLASS A GROSS RATE RATE COMPLETIONS ABSORPTION GROSS RENTAL RENTAL RATE* RATE* Financial Core 25,152,591 6.6% 5.3% 1,296,356 234,476 0 (78,324) 10,774 $37.43 $42.04 Downtown West 7,553,718 8.8% 7.7% 441,288 514,000 0 (56,715) (254,168) $26.29 $32.95 Downtown East 7,508,093 2.3% 1.9% 95,142 0 0 (4,064) (11,497) $24.43 $31.56 Old Montreal 7,760,099 6.9% 6.2% 636,951 0 0 (38,072) 97,388 $27.95 $31.05 Total Central 47,974,501 6.3% 5.3% 2,469,737 748,476 0 (177,175) (157,503) $33.49 $39.84 West End 7,931,958 7.5% 6.5% 238,051 74,000 0 38,966 62,745 $20.01 $25.13 Saint-Laurent 4,610,832 11.1% 10.8% 284,138 0 100,000 42,901 37,310 $23.92 $25.56 Laval 3,772,418 6.7% 6.0% 124,156 463,613 157,216 35,675 111,872 $24.02 $26.01 East End (East) 4,689,954 8.2% 6.8% 173,551 0 0 42,360 (18,220) $22.58 $25.76 East End (West) 7,526,266 13.8% 12.3% 257,321 0 0 (11,887) 48,749 $19.37 $21.61 Verdun – LaSalle 1,669,600 2.6% 2.6% 15,078 0 0 2,732 15,287 $25.25 $25.48 West Island 1,569,292 15.9% 14.6% 90,574 300,000 0 1,247 (16,599) $23.20 $28.67 South Shore 3,224,790 7.9% 7.4% 259,174 87,714 99,642 10,203 84,371 $22.27 $24.95 Suburbs 34,995,110 9.5% 8.6% 1,442,043 925,327 356,858 162,197 325,515 $21.75 $24.81 TOTALS 82,969,611 7.7% 6.7% 3,911,780 1,673,803 356,858 (14,978) 168,012 $27.73 $33.76 * RENTAL RATES REFLECT ASKING $PSF/YEAR MARKET HIGHLIGHTS Significant Q4 2012 Lease Transactions SUBMARKET TENANT BUILDING CLASS SQUARE FEET 1134 Sainte-Catherine West Downtown West N/A B 35,571 2001 University Financial Core BNP Paribas B 21,584 2001 McGill College Financial Core Eidos Interactive Corporation A 20,095 Significant Q4 2012 Sale Transactions SUBMARKET BUYER PURCHASE PRICE / $PSF SQUARE FEET 8300 Décarie West End 7929536 Canada Inc. $17,250,000 / $190.17 90,706 685 Cathcart Financial Core Immeuble Cathcart Inc. $10,600,000 / $128.81 82,290 265 Saint-Jacques West Old Montreal Théâtre Rialto Productions Inc. $4,050,000 / $132.41 30,586 Significant Q4 2012 Construction Completions SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET N/A Significant Projects Under Construction SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET District Griffin - Ilot 10 West End N/A Q1 2013 74,000 2905 Place Louis R. Renaud Laval Sanofi Q1 2013 117,543 1950 Maurice Gauvin Street Laval Xstrata Q1 2013 86,070 3141 Taschereau South-Shore N/A Q1 2013 60,714 Place des Affaires – Phase III South-Shore N/A Q1 2013 27,000 5 Laval Place Laval SIQ Q2 2013 260,000 Merck Canada West Island Merck Canada Q4 2013 300,000 Aimia Tower Financial Core Aimia Q2 2014 234,476 Deloitte Tower Downtown West Deloitte Q2 2015 514,000 The market terms and definitions in this report are based on NAIOP standards. NoGuy Massé, CCIM, SIOR warranty or representation, express or implied, is made to the accuracy or completeness 2Senior Vice President of the information contained herein, and same is submitted subject to errors, omissions,Tel.: (514) 841-3830 change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals.Fax: (514) 841-3871 2001 University Street, Suite 1950 © 2012 Cushman & Wakefield, Inc. All rights reserved.Cell: (514) 594-9344 Montreal (Qc) H3A 2A6guy.masse@ca.cushwake.com

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