An unprecedented, but not alarming situation

(Extract from Immobilier Commercial - No.6 - November 2023)

As Québec's main economic and financial hub, the city is home to some 110 million sq. ft. of office space across the Greater Montréal area, including 22 million sq. ft. in the downtown core. The consequences of the pandemic and the advent of remote work have reshuffled the cards in this key commercial real estate sector.

"We're headed for a vacancy rate of more than 20%. We are not the only market in Canada in that situation, but it's something we've never experienced in the real estate sector," said Jean Laurin, a partner and CEO for Québec of Avison Young.

EMPHASIS ON QUALITY
While this overall picture gives little cause for optimism, it does need to be qualified. "You have to look at the market not only in terms of location and the tensions within it, but also in terms of building category," observed Joël Chareyron, vice-president of the Alfid Group. "When you dig deeper, you realize that the properties that might have more difficulty are those that, when it comes to services, don't offer what you'd find in a category A or triple A property."

The dynamics of work are changing, as are the needs of companies and their employees. As a result, companies are embarking on a veritable race for higher-quality space, which is clearly playing into the hands of the most modern, best-serviced buildings. "A-class buildings are less affected than B- and C-class buildings. Companies are more likely to choose quality buildings that offer more attractive spaces for their employees, as a way of encouraging them to return to the office," said Vincent Chiara, president of the MACH Group...

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