Industrial Market Report

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Last Updated: December 2020

Key Market Statistics

Greater Montréal Area (GMA) - Q3 2020

(NOTE: Availability rate references space contained within a building that is currently being marketed as available for lease with an immediate or future possession date. Vacancy rate references space contained within a building that is currently physically unoccupied by a tenant.)

Major Developments

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Market Pulse:

  • Since the start of the pandemic, the level of activity has remained particularly high in the Greater Montreal Area (GMA) industrial market. The availability rate is maintaining its downward trend and now stands at 3.1%. The rate was 6% in 2017, which represents a 50% drop in the availability rate in the span of 3 years.
  • During the last quarter, over half a million square feet of industrial space was absorbed in the GMA due to the growing demand in e-commerce and warehousing related to logistics (3PL) and last-mile delivery.
  • The following submarkets have seen the highest absorption rate in the last quarter: Midtown South, North Shore Lanaudière, the South Shore and the West Island. In fact, the West Island has seen the highest level of activity since the start of the year with over 750,000 sq. ft. of absorption.
  • Only one project at 5901 Westminster Avenue was delivered during the 3rd quarter for a total of 118,000 sq.ft. Canadian Pacific (CP) will use these facilities for freight transshipment services.
  • Currently, there is a total of 2,651,855 sq.ft. under construction. The majority of this space is geared towards single tenants such as IKEA, Molson Coors, Sobey's and Amazon among others.
  • The remainder of the development projects constitute a total of 479,374 sq.ft. and are scheduled for delivery by June 2021. This is clearly insufficient to meet the growing demand and we expect these spaces to be quickly leased upon delivery.
  • In terms of occupancy costs, the net asking rent has kept with the upward trend to reach $7.36. While the average net rent in Canada sits between $11 and $13, the relatively low rent in the Greater Montreal Area is mostly due to the current inventory which consists of obsolete buildings. An increase in occupancy costs is to be expected due to the low availability of quality industrial space in the inventory as well as the rising construction costs.

Major Transactions:

  • Montoni sold 11 light industrial buildings from its industrial portfolio to Summit REIT for $88 million
  • PIRET acquired 12 industrial buildings from Olymbec's real estate portfolio in Saint-Laurent and West-Island for $81 million
  • Over the last quarter, Olymbec have also sold 3 buildings located in Laval, Montreal Midtown North and Montreal East to 3 different buyers which include Groupe Quint
  • Mondev have acquired a 110,000 sf property at 10655 Henri-Bourassa West in Saint-Laurent
  • Bulletproof Logistics have signed a new lease for 301,520 sf at 1600 Transcanada in Dorval
  • Amazon leased 208,475 sf at 5799 route de l'Aeroport in the South Shore
  • Metro Canada Logistics took 80,000 sf in the West-Island at 1325 Hymus, Dorval
  • Metro Inc. leased 110,000 sf at 10655 Henri-Bourassa West in Saint-Laurent

Net Asking Rent and Availability

Source: Altus Insite (Q3 2020)

Construction and Deliveries

Source: Altus Insite (Q3 2020)

Market Summary

Source: Devencore Research & Altus Insite (Q3 2020)

Market Commentary:
“According to projections, the pandemic has precipitated consumers' online shopping habits by nearly five years. As a result, the demand for distribution centers has exploded. However, the small inventory of quality industrial spaces (with ceilings of 28 feet and more) means that large industrial users must turn to built-to-suit developments to fit their needs.
It should be noted that nearly 75% of the industrial spaces available in the inventory are made up of buildings constructed between the 1950s and 1990s and have a low ceiling height of 24 feet and less. For the most part, these are smaller buildings that are more difficult to rent due to their low ceiling height. However, due to the demand for temporary storage in connection with last mile deliveries, it will be interesting to see if this kind of space can find a taker or if these spaces will instead be redeveloped.
The pandemic seems to have had a revealing effect for the industrial sector. Among the different sectors that make up the commercial real estate market, the industrial sector has remained resilient and has even grown in recent months. There is now an open race on the developer side to launch industrial projects to take advantage of this opportunity. The challenge now lies in the limited availability of land in key sectors that have access to skilled labor.
The majority of projects currently underway are aimed at large single occupants such as IKEA, Molson Coors, Sobeys and Amazon. This will put enormous pressure on tenants looking for industrial space. Historically, rents in the Greater Montreal Area have been well below the Canadian average, but with the increased industrial demand resulting from the pandemic as well as the rising construction costs, rents are expected to rise in the months and years to come. While waiting for new development projects to be delivered, industrial users will need to show patience and creativity in order to navigate a rapidly changing market.”


Richard Breton
Vice-President and General Manager


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