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May 23, 2019 - Blog Article
Montreal’s CRE: Key Takeaways From The 2019 Real Estate Forum

Canada’s technology and retail sector is the center of highlight for commercial asset management companies. Especially cities like Montreal which according to the Montreal Real Estate Forum held on April 17 this year, has been driving new real estate benchmarks towards these. Not only this, the market is showing signs of continuous positive outlook with global and Canadian investments on the rise.

 

 

 

Check out some of the noteworthy insights from the 2019 Montreal Real Estate Forum:

 

Strong Economy Driving Growth in Life Sciences and Health Tech

The city is experiencing high GDP growth coupled with strong foreign investment, influx of skilled workers, population growth and increased investment in technology research with extensive focus on deep learning and AI. Giants like Facebook, Samsung, DeepMind, RBC, Thales have already announced AI ventures in the city in 2017 with UK firms already taking the lead in December 2018. An investment of such a scale is strongly enhancing the city’s infrastructure and human resource capital.

 

Rise In Housing Market Will Aid Commercialization

Amid slow growth in housing real estate, Montreal’s housing market is experiencing steady sales growth especially hitting a high in December last year based on the Centris provincial database. High pricing is forecasted for the years 2019 and 2020 causing the Greater Montreal Area to surpass urban housing sales as compared to other centres in the country. This will bolster the commercial outlook of the area - meaning - more people, more opportunities, more employment and subsequently more investment.

 

Tech Leasing On The Rise Despite Shortage Of Quality Space

A key aspect of Montreal’s tenant base is that it is primarily entrepreneurial and has been enjoying stable rates over a decade now.However, gross rental rates in Greater Montreal underwent 90 cent increase in 2018 from the previous year while in downtown the rates rose by $1.86 per square feet - thus, indicating a shortage of space. Lack of land in Montreal is a growing concern that is fueling prices on the island and encouraging developers to undergo new construction and enhance the old structures. Despite the commotion with the rising rates, leasing is supported by technology firms  like Google, Coveo, Microsoft that are continuing to expand construction in the area.

 

Cannabis & Bitcoin Miners Increasing Operations

Montreal outperforms other Canadian market in terms of electricity costs which are in turn pushing more cannabis and bitcoin companies to the area. The number of leasing deals in these sectors has experienced double digit growth in recent years. This will be an interesting watchout for pot manufacturers as well as bitcoin companies in coming times as the growth is expected to continue.

 

Record Absorption In Industrial Sector

According to CBRE, Montreal’s leasing market has a record year with a total of 8.9 M sq. ft. of space absorbed. The city will be seeing a healthy industrial market in 2019 with no significant reduction in the demand with pre-leased or already under-contract land that is expected to tighten the market over the year.

 

Hub For Mixed Use Development Projects

The city has attracted a lot of foreign investment recently with REITs being a dominant purchaser group of distribution and warehouse buildings and is also continuing to draw more and more cash from Chinese investors further down the road. Not only this, Montreal is a recent  focus of multi billion dollar development projects centered around TOD hubs that will accelerate the suburban areas around the GMA. If you don’t know what the TOD project is - it is a transit-oriented development that comprises of residential and commercial together to optimize land use and maximize access to public transport.

 

Retail Brands To Flourish

The retail sector will experience disruption with investment in areas that will enhance in-store customer experience and improved access through convenient parking and transportation services, food centers and other commercial establishments that will support retail initiatives. Retail startups like Berso are also reaching the forefront by introducing a blend of ecommerce and brick and mortar stores to become one stop shops. Brands like Cadillac Fairview are taking commercial real estate to new heights with significant investments into its Montreal Shopping Centres.

 

The strong GMA economy, major infrastructure projects that are already underway and the lowering industrial vacancy rates in suburban areas is being seen as an opportunity for tenants due to the rise in rents on the island and the scarcity of space. All these, along with the new benchmarks in Montreal’s real estate transactions and the rising investor interest for development would be something to keep a tap on over this year.

 

To learn more about industrial opportunities in Canada, contact ReDev to get started.