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MONTRÉAL

Industrial Market Report

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Last Updated: May 2020

Key Market Statistics

Greater Montréal Area (GMA) - Q1 2020

Major Developments

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Market Pulse:

  • As the province faces an ongoing battle against COVID-19, it is still too early to see the real impact of the lockdown on the industrial sector
  • Prior to the pandemic, the industrial sector had some strong fundamentals going into Q1 as availability rates maintained a downward trend while rental rates kept going up.
  • The lack of available industrial space was especially evident in markets such as the South-Shore and Laval. With such scarcity, rental rates in these markets have ramped up.
  • Throughout the pandemic, there has been a lot of interest for warehousing space as food and medical supplies became very sought-after goods.
  • E-commerce has been driving demand for larger spaces and higher ceiling height.
  • As the manufacturing sector reopens, it will be interesting to see how the safety measures impact productivity as well as space design on the long term.
  • Compared to the retail and office sectors, the industrial sector seems to be immune to the adverse effects of the pandemic as activity remained particularly strong. Moreover, the lack of speculative industrial development in the GMA in general is not giving tenants a lot of options when it comes to finding adequate space.

Major Transactions:

  • PIRET acquired HOOPP Realty's portfolio of 11 properties for $249 million
  • 6000 Transcanada (previous head office of Structube) was sold for $25.5 million
  • ILSCI renewed 527,000 SF at 1900-2000 Halpern Street
  • Dorel Inc. did an expansion of 123,885 SF on top of renewing 429,423 SF at 12345 Albert-Hudon Boulevard
  • CAC Transport leased 220,000 SF at 5650 Transcanada Highway in Pointe-Claire
  • PIRET acquired 5 industrial buildings from Manulife
  • Amazon leased 240,000 SF at 5555 Ernest-Cormier Street in Laval


Net Asking Rent and Availability

Source: Altus Insite (Q1 2020)

Construction and Deliveries

Source: Altus Insite (Q1 2020)

Market Summary

Source: Devencore Research & Altus Insite (Q1 2020)

Market Commentary:
“Amidst the COVID-19 pandemic, the industrial market statistics are yet to reflect the real impact of the lockdown. However, despite the lockdown, the industrial sector has seen a very high level of activity.
Throughout the pandemic, demand has been strong for industrial space, more specifically for warehousing space as food and medical supplies became very sought-after products. For example, Sobeys ramped up its automated infrastructure to increase their delivery capacity. E-commerce was an important driver of industrial space before the pandemic and everything points to a long-term trend as the shift from in-store to online shopping becomes even more prominent among consumers.
Moreover, there seems to be a marked interest among manufacturers to bring back the manufacturing of certain items at a local level. Of course, costs and logistical challenges will weigh in the balance. This reflection could create additional pressure on the needs for industrial spaces.
Prior to the lockdown, the industrial sector showed some strong fundamentals. As the province slowly re-opens, it will be interesting to see if the strong fundamentals are able to carry the industrial real estate market through the next few quarters. So far, there is a sense that the industrial market has been immune to the effects of the pandemic, especially compared to the retail market and to some extent the office market. In fact, the market has remained very active and is not showing any sign of slowing down. Developers are yet to commit to speculative developments even as industrial space becomes scarce in certain sectors.”

Contact

Richard Breton
Vice-President and General Manager
rbreton@devencore.com


514.392.9702


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