MONTRÉAL - In its Industrial Real Estate Market Report published today, Newmark Knight Frank Devencore reported that the industrial real estate market in the Greater Montreal area (GMA) continued to recover through most of 2011. In the first half of the year, there was a significant amount of space absorption, and while the rate of absorption slowed in the last two quarters of 2011, overall availability rates still fell into the 5.5% range, down from 8.0% at the end of 2010.
"Because much of the activity in Montreal's industrial sector is tied closely to the import and export markets--which in turn are dependent on the economic health of our largest trading partner to the south--businesses in the industrial sector are more cautious when it comes to relocation or expansion than their counterparts in the office sector," said Jean Laurin, President and CEO of Newmark Knight Frank Devencore.
Vacancy rates vary significantly in Montreal's main industrial submarkets, as does the quality of the space that is available. In the city's largest submarket, the West Island, for example, the overall vacancy rate in Q4 2011 stood at approximately 6.0%, while in Montreal East the combined vacancy rate is approximately 4.6%. Rates are considerably higher on the South Shore--at 11.8% at the end of 2011--and in Laval, where overall rates exceed 13%.
Across the rest of the country, availability rates also declined through 2011, dipping well below 8%. Activity was strong in the oil and gas sector, and western cities, including Calgary, Winnipeg and Edmonton continued to register the lowest industrial vacancy rates in the country. The warehousing, distribution and manufacturing sectors in Toronto and Montreal also performed reasonably well.
"With the recent unexpected fluctuations in unemployment rates, a slower recovery in the country's manufacturing sector and sluggish growth in the U.S., we anticipate that demand for industrial space will be relatively flat through at least the first quarter of 2012," Mr. Laurin said. "There is a very good supply of space in Montreal larger than 25,000 square feet, so tenants who require this amount of space may find that landlords are willing to exercise some flexibility. In general, while global economic conditions remain uncertain, cautious tenants and their real estate advisors may increasingly be seeking to negotiate shorter lease terms."
About Newmark Knight Frank Devencore
Devencore is the Canadian partner of Newmark Knight Frank, one of the largest real estate service firms in the world. 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
About Newmark Knight Frank
Newmark Knight Frank is one of the largest real estate service firms in the world. Headquartered in New York, Newmark Knight Frank and London-based partner Knight Frank together operate from more than 240 offices in established and emerging property markets on five continents. With a combined staff of more than 7,000 and revenues last year exceeding $993 million, this major force in real estate is meeting the local and global needs of tenants, owners, investors and developers worldwide. For further information, visit www.newmarkkf.com.
Newmark Knight Frank is a part of BGC Partners, Inc. (NASDAQ:BGCP), a leading global brokerage company primarily servicing the wholesale financial markets. For further information, visit www.bgcpartners.com.
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