Avison Young outlines the market's Q3 highlights
The availability rate for “Class A” office space in Montreal is nearing 18%, and is likely to see a further increase as many tenants continue to downsize, according to Avison Young.
During the third quarter, “only seven in 10 workers are back to the office, compared to March 2020,” Avison Young said in its latest market report. “Tuesdays, Wednesdays, and Thursdays are slightly busier, but still below their pre-pandemic levels.”
Montreal saw its available office space shoot up from 18.5 million square feet in Q2 to 19.1 million sf in Q3. The market’s year-to-date office space absorption was -680,000 sf, with average gross asking rent psf at $29.45.
A significant number of companies are also nearing the expiration dates of their leases, and many of these might consider reducing their total space requirements by as much as 20% to 30%.
“Tenants who are moving are opting for higher-quality buildings and new projects, both downtown and in the suburbs,” Avison Young said. “Tenants’ expectations of what an office space today should be have accelerated the obsolescence of an important segment of the market, where structural vacancy is rapidly and inevitably taking hold.”
The emergence of what Avison Young described as a “two-tier market” appears to be irreversible at this point.
“Remote work’s widespread adoption over an extended period has made its pros and cons clear,” Avison Young said. “The benefits of working from home can easily be quantified: Reduced occupancy costs for employers, while employees save hours in commute and expenses related to going to the office.”
