OFFICE MARKET REPORT | 1st QUARTER 2021
Availability
The market was hit hard by the pandemic, and its impact from one year to the next is palpable.
The market was hit hard by the pandemic, and its impact from one year to the next is palpable. Between the first quarter of 2020 and the first quarter of 2021, the total availability rate for Greater Montréal rose from 10.8% to 14.5%, the available area increasing from 11,076,321 square feet to more than 15,357,537 square feet. Year over year, this represents a 38.7% increase in the total availability for Greater Montréal.
The availability in class A buildings in Greater Montréal reached 13% at the end of the first quarter of 2021, which represents an increase of two percent over the past 12 months. The increase in availability in class B buildings is much more significant. It reached 16.5% at the end of March 2021 compared with 11.4% a year before and 15.5% at the end of 2020.
This indicates that tenants of less prestigious buildings are less resilient to the current conditions, as these buildings are often home to start-ups or small and medium size companies. In contrast, tenants in more prestigious buildings, often large, well established businesses, or multinationals, seem to fare better in the current pandemic circumstances.
The availability rate in downtown Montréal reached 12.8% at the end of the first quarter of 2021, compared to 8.8% 12 months before. Nevertheless, of all the markets in the Greater Montréal Area, downtown is now showing the lowest availability rate. The South Shore, which was doing well thus far, seems to have gotten caught up by events, while total availability rose from 12.1% to 15% in the last quarter. Availability has gone up in all markets without exception.
A much less drastic increase in sublet availability
Since the end of March 2020, sublet availability rates more than doubled, from 981,245 to 2,146,044 square feet, which represents a 118.7% increase.
It is important to note, however, that the drastic increase of available area for sublease has slowed significantly in the last quarter, while only 76,627 square feet were added on the sublease market between January 1 and March 31, which resulted in maintaining the sublease availability rate at 2% for the second consecutive quarter. Comparatively, between the second and third quarters of 2020, the subleasing market saw an increase of 673,696 square feet while the market only recorded 436,120 square feet between the first quarter of 2021 and mid-year 2020.
This lull might foreshadow that the deterioration of market conditions is slowing down, but the breadth of this slowdown is still to be determined.
Photo : Michael Descharles, Unsplash
Absorption
The Greater Montréal Area recorded a negative absorption of -631,657 square feet in the first quarter of 2021. Since the first quarter of 2020, the annual absorption was sitting at 412,851 square feet.
The downtown sector was hit the hardest during the first quarter, with an absorption that sank to -661,535 square feet, for a yearly total of -1,644,798 square feet for the sector.
As expected, the South Shore saw the largest absorption for the quarter in Greater Montréal, with a positive absorption of 150,145 square feet at the end of March 2021.
