MONTREAL - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that vacancy rates in downtown Montreal's Class "A" and "B" office buildings rose to 9.0% over the first half of 2015. The availability rate--which also takes into account the office space that may currently be occupied but is nevertheless available for lease or sublet-- now stands at 15.5%.
The spike in the availability rate has been generated by a number of factors. First, approximately 1.4 million square feet of new office space has been recently added to the market. Second, the redevelopment of what were once industrial properties to address the space demands of tenants seeking brick and beam spaces has had an impact. Finally, many tenants have developed occupancy strategies to reduce the amount of space that they lease.
"High availability rates tend to give the market an added spark," said Jean Laurin, President and CEO of Newmark Knight Frank Devencore. "Landlords are motivated to secure transactions with solid tenants, and those landlords who have the most amount of vacant space have the greatest motivation. As a result, the opportunities for tenants to secure advantageous lease transactions are more plentiful than they have been in a number of years."
Mr. Laurin also noted that many tenants making the decision to relocate their offices are seizing the opportunity to drive organizational change. "The decision to relocate is often tied initially to cost, and many organizations take advantage of a relocation to reduce the amount of office space they occupy. But other factors supporting an occupancy strategy also come into play. Branding is chief among these. Broadly understood, branding can be seen as defining and promoting the company's essential identity and values. And moving into new premises is the perfect opportunity to renew or support a brand," Mr. Laurin said.
Across the rest of Canada, occupancy trends have generally followed local economic conditions. In Calgary and Edmonton, for example, vacancy rates have risen sharply following the collapse of global oil prices, while most other cities have seen more moderate shifts. It should also be noted that the inventory of downtown office space across the country has expanded considerably. Over 5.3 million square feet has been added over the past two years, and there are major projects underway in most cities that will further augment this expansion.
"Despite the economic challenges being faced in many areas of the country, there's a buoyant mood in the Greater Montreal Area. Major infrastructure work is now underway, and there is a sense that the city is finally asserting its economic advantages," Mr. Laurin said.
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.
About Newmark Grubb Knight Frank
Newmark Grubb Knight Frank is one of the world's leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NGKF's 12,800 professionals operate from more than 370 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NGKF's strong foundation makes it one of the most trusted names in commercial real estate. NGKF's full-service platform comprises BGC's real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing; capital markets services, including investment sales, debt placement, appraisal, and valuation services; commercial mortgage brokerage services; as well as corporate advisory services, consulting, project and development management, and property and corporate facilities management services. For further information, visit www.ngkf.com.
NGKF is a part of BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets. BGC's common stock trades on the NASDAQ Global Select Market under the ticker symbol (NASDAQ: BGCP). BGC also has an outstanding bond issuance of Senior Notes due June 15, 2042, which trade on the New York Stock Exchange under the symbol (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcpartners.com/.
For further information, contact:
Gisèle De Kinder
Administrative Assistant to the President and CEO
Newmark Knight Frank Devencore
Devencore Ltd., Real Estate Agency