CBRE says that tenant demand in 2017 reached a record high with over 1.93 million square feet of positive absorption, breaking the 1.8 million record set in 2007.
The demand increased even as asking rents jumped 4.8% year-over-year to $22.22 per square foot for Class A offices.
CBRE’s outlook is that Montreal will become a landlords’ market for offices in 2018, the first for 20 years, as demand outstrips supply of contiguous office space, and rents push higher.
Earlier last year we saw Montreal’s industrial market shift to become a landlord’s market and now we’re seeing the same phenomenon within the office market,” commented Avi Krispine, Managing Director of CBRE Quebec.
“Cycle back 18 months, and generous tenant inducements such as periods of free rent were the norm. Today, inducements have been scaled back and, after years of stagnation, rents are rising and are expected to increase again in 2018.”
While tenants took 1.93 million square feet of office space in 2017, there was only 1.35 million square feet of new supply. It took the vacancy rate to 12.8% across the market with a tighter 9.7% for downtown Montreal.
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Growth in the technology sector and low unemployment is driving demand for offices in Montreal.