MARKETBEATMARKETBEAT Montreal,Montreal, QC QC OfficeOffice Q1 Q4 2019 2017 MONTREAL OFFICE Economy Economic Indicators The unemployment rate in the Greater Montreal Area (GMA) remained unchanged at 5.9% for a second consecutive quarter. 12-month Q1 18 Q1 19 Although there has been no movement, this rate continues to Forecast highlight the positive economic outlook for the GMA. Montreal Employment 2.2 mil 2.2 mil (Source: Statistics Canada) Montreal Unemployment 6.5% 5.9% Canada Unemployment 5.8% 5.8% In March 2019, the Bank of Canada left its benchmark interest rate unchanged at 1.75% for a third consecutive Market Indicators (Overall, All Property Types) announcement. This decision came following disappointing 12-month Q1 18 Q1 19 results from key economic indicators during the preceding 3 Forecast months; in fact, economic growth during this period was the Vacancy 13.7% 10.9% lowest it has been in the last three years. Although the potential Net Absorption (sf) -256,783 795,650 rise in interest rates towards the end of 2019 remains a concern Under Construction (sf) 2,190,934 3,171,188 for borrowers, the stability of the monetary policy can be Average Asking Rent* $27.30 $33.64 considered a positive sign for the general economy. *Rental rates reflect gross asking $psf/year Market Overview The Greater Montreal Area has now seen three consecutive Overall Net Absorption/Overall Asking Rent quarters of positive absorption, with 795,000 square feet (sf) of 4-Quarter Trailing Average space absorbed in the first quarter of 2019. Once again all 600 $32 three major markets (Central, Midtown, Suburban) saw positive 500 absorption, although differing from the preceding quarters, $30 400 market activity was more robust in Midtown and Suburban 300 $28 submarkets than it was in the Central area. This absorption has 200 $26 pushed the overall vacancy in the GMA down 50 basis points 100 since the fourth quarter of 2018 to a five-year low of 10.9%. The 0 $24 market also saw delivery of three new office buildings totaling -100 $22 -200 just over 356,000 sf. Of that, only 34,462 sf was vacant upon -300 $20 delivery. 2013 2014 2015 2016 2017 2018 Q1 2019 Net Absorption, SF (thousands) Asking Rent, $ PSF Outlook While not as robust as 2018, the market is expected to maintain its momentum over the course of 2019. Although Overall Vacancy market conditions are increasingly becoming landlord favourable, the market remains quite competitive. Large 16.0% occupiers seeking space in the Central area are now looking 14.0% to new developments to satisfy their needs as there are very 12.0% few large contiguous blocks of available space left in the 10.0% market. In the Financial Core, only six options for tenants 8.0% Historical Average = 10.7% seeking 50,000+ sf of space remain. Despite the 6.0% disappearance of large available space options and the significant downward pressure on vacancy rates, landlords 4.0% have only marginally increased rent expectations at 2.0% approximately 2% annually. A slight year-over-year increase in 0.0% 2013 2014 2015 2016 2017 2018 Q1 2019 average net asking rates is anticipated as a result of Class AAA deliveries; however, the range of rates is not expected to change. cushmanwakefield.com MARKETBEATMARKETBEAT Montreal,Montreal, QC QC OfficeOffice Q1 Q4 2019 2017 OVERALL OVERALL SUBLET DIRECT OVERALL CURRENT NET YTD OVERALL UNDER INVENTORY AVERAGE AVERAGE SUBMARKET VACANT VACANT VACANCY ABSORPTION ABSORPTION CONSTRUCTION Economic Indicators (SF) ASKING RENT ASKING RENT (SF) (SF) RATE (SF) (SF) (SF) (ALL CLASSES)* (CLASS A)* Financial Core 21,882,859 51,031 1,938,445 9.1% 139,965 139,965 0 $41.55 $44.81 Downtown West 4,038,881 1,985 236,357 5.9% 25,705 25,705 173,699 $34.95 $42.04 Downtown East 9,295,798 0 491,049 5.3% 56,479 56,479 610,976 $35.70 $49.38 Downtown South 11,914,800 272,752 650,145 7.7% -122,697 -122,697 1,000,000 $42.23 $44.69 MarketDowntown Indicators Southwest (Overall, All Property2,100,971 Types) 10,000 136,370 7.0% 28,121 28,121 148,618 $24.04 N/A Old Montreal 4,569,297 11,704 295,923 6.7% 45,107 45,107 150,000 $30.58 N/A Westmount 2,328,306 1,240 127,720 5.5% 18,465 18,465 0 $32.92 $36.72 Central Area 56,130,912 348,712 3,876,009 7.5% 191,145 191,145 2,083,293 $38.61 44.83$ Midtown East 2,620,068 22,036 199,662 8.5% 28,121 28,121 418,000 $25.69 N/A Midtown Central 5,016,529 43,871 256,509 6.0% 85,261 85,261 176,434 $24.52 N/A Midtown North 5,620,131 0 1,143,441 20.3% 33,709 33,709 0 $23.02 $29.25 OverallDécarie Net CDN Absorption/Overall 2,550,767Asking Rent 14,930 464,052 18.8% 7,253 7,253 0 $28.76 $32.67 4-Quarter Trailing Average Midtown West 760,064 0 163,124 21.5% -2,912 -2,912 0 $24.34 N/A Midtown South 981,082 116,767 22,932 14.2% -3,500 -3,500 0 $25.10 N/A Île-des-Sœurs 1,735,401 8,600 249,942 14.9% 1,794 1,794 0 N/A N/A Saint-Laurent 7,091,374 314,693 1,093,266 19.9% 59,826 59,826 35,961 $28.18 $31.21 Midtown 26,375,416 520,897 3,592,928 15.6% 209,552 209,552 630,395 $25.82 $31.06 West Island 2,909,993 17,802 479,759 17.1% 24,230 24,230 0 $30.03 $31.28 East End 3,310,114 21,181 490,437 15.5% 161,824 161,824 0 $24.29 $29.13 Laval 4,350,250 31,417 623,962 15.1% 27,197 27,197 0 $32.40 $34.80 South Shore 5,069,085 56,056 659,996 14.1% 181,702 181,702 457,500 $28.53 $32.29 Suburbs 15,639,442 126,456 2,254,154 15.2% 394,953 394,953 457,500 $28.99 $32.48 OverallGREATER Vacancy MONTREAL AREA 98,145,770 996,065 9,723,091 10.9% 795,650 795,650 3,171,188 $33.64 $40.29 TOTALS *Rental rates represent $ per square foot per year CURRENT YTD OVERALL SUBLET DIRECT OVERALL UNDER INVENTORY NET OVERALL NET OVERALL AVERAGE Building Class VACANT VACANT VACANCY CONSTR (SF) ABSORPTION ABSORPTION ASKING RENT (SF) (SF) RATE (SF) (SF) (SF) (ALL MARKETS)* Class A 40,830,395 589,595 3,192,278 9.3% 316,725 316,725 2,731,609 $40.29 Class B 44,103,658 379,574 5,111,113 12.4% 540,602 540,602 439,579 $30.95 Class C 13,211,727 26,896 1,419,700 10.9% -61,677 -61,677 0 $23.73 cushmanwakefield.com MARKETBEAT Montreal, QC Office Q1 2019 Suburbs Suburbs Suburbs Midtown Suburbs Central Key Lease Transactions Q1 2019 PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET 4150 Sainte-Catherine West 34,747 CROWE BGK S.E.N.C.R.L. LLP Renewal Westmount 800 René-Levesque West 25,000 Confidential New Tenant Financial Core 2001 Robert-Bourassa 21,584 BNP PARIBAS New Tenant Financial Core 2055 Peel 20,326 Postmedia New Tenant Financial Core Key Sales Transactions Q1 2019 * Part of the Cominar REIT - Groupe Quint GMA Office Portfolio 2019 PROPERTY SF SELLER / BUYER PRICE / $PSF SUBMARKET 3773-3777, 3900, 3950 de la Cote-Vertu & 371,628 Cominar REIT / Groupe Quint JV Rainbow Capital $29,950,000 / $81 Saint-Laurent 7355, 7405 Transcanada Highway* 5101 & 5151 Buchan Street* 167,020 Cominar REIT / Groupe Quint JV Groupe Mach $11,300,000 / $68 Décarie CDN 950 & 970 Beaumont 120,305 Groupe Montoni / Montez Corporation $18,750,000 / $312 Midtown Central 1620 Notre-Dame Street West & 415 The Governing Council of The Salvation Army in Canada / 110,363 $12,100,000 / $110 Downtown Southwest Richmond Street MTRPL (11298771 Canada inc.) 14 Place du Commerce 87,718 Canderel / GCA Immobilier (9374-2773 Québec inc.) $16,000,000 / $182 Nun’s Island Cushman & Wakefield For more information, contact: About Cushman & Wakefield Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate 999, boul. de Maisonneuve Ouest George Meletakos occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees bureau 1500 Senior Research Analyst in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project Montréal, QC H3A 3L4 Tel: +1 514 841 3808 management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow www.cushmanwakefield.com [email protected] @CushWake on Twitter. Twitter: @CushWakeMTL ©2019 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy..
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