OFFICE MARKET REPORT | 2nd QUARTER 2021
Availability
It appears that the more favorable pandemic conditions are already starting to have an impact on the Montreal office market.
Between the second quarter of 2020 and the second quarter of 2021, the total availability rate in the Greater Montréal Area climbed from 11.1% to 14.9%, with the total available area increasing from 11,495,885 square feet to 15,834,892 square feet.
Year over year, this represents a 34.2% increase in total availability in Greater Montréal. However, the increase in availability showed a marked slowdown compared to previous quarters.
The availability in class A buildings within the Greater Montréal Area reached 13.3% at the end of the second quarter of 2021, which represents an increase of 2.5 percent over the past 12 months. The increase in availability in class B buildings was more significant; it reached 17.2% at the end of June 2021 compared to 12.1% a year earlier and 16.6% in the first quarter of 2021.
With availability on the rise, the higher-class buildings seem to be faring better thanks to the quality of their tenancy which is made up mostly of large companies and multinationals. Some companies that performed well during the pandemic also took advantage of favorable conditions to relocate to more prestigious buildings.
The availability rate in downtown Montréal reached 13.5% at the end of the second quarter of 2021, up from 9.2% 12 months earlier. However, while downtown availability is still on the rise, the increase is less pronounced compared to previous quarters. Furthermore, a few other sectors such as Laval, the South Shore, the East-End and West-Island even saw a slight drop in availability during the second quarter.
Companies anticipate that more employees will return to the office.
From June 2020 to June 2021, the availability rate in office sublease in Greater Montréal more than doubled, from 959,601 square feet to 2,328,989 square feet, representing a total increase of 142.7%.
For the second quarter of 2021, nearly 182,945 square feet were added to the Greater Montréal sublease inventory, the availability rate for office sublease reaching 2.2%. Interestingly, however, some companies that had initially decided to sublease a portion of their space at the start of the health crisis recently decided to take those same spaces off the market.
The loss of flexibility in terms of occupancy as well as the costs associated with subleasing space are some of the factors contributing to this change of direction as companies anticipate that more employees will return to the office.
Absorption
The Greater Montréal Area recorded a negative absorption of -382,763 square feet in the second quarter of 2021. The Midtown area took the biggest hit as absorption plunged to -207,497 square feet.
Downtown Montréal, meanwhile, experienced negative absorption of -195,430 square feet during the second quarter, which still represents an improvement over the first quarter when absorption reached -661,535 square feet.
As was the case in the first quarter, it was the South Shore that saw the most favorable quarterly absorption in Greater Montréal, registering a positive absorption of 48,969 square feet at the end of June 2021. The advancement of the Réseau express métropolitain (REM) as well as the increased interest for satellite offices seem to have played a role in the positive absorption of the sector.
