Montreal office market report

Q2 2022

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Economic turmoil dampens return to the office

While the current economic uncertainty and the worrisome rise in Covid infections since June are prompting tenants to adjust the pace of their short-term return-to-work plans, they will not derail them from the goal to bring back employees and nurture company culture and innovation. The temporary halt to return-to-office (RTO) momentum is expected to loosen as concerns regarding the 7th wave of infections dissipate.

17.2%

Availability

Availability rates have continued to increase since the beginning of the year, but at a much slower pace. In addition, availability rates have been stable or even declining for Class B buildings in the suburbs for the past year. Despite these few encouraging signs, at 17.2% in Q2 2022, the availability rate far exceeds the all-time high of 15% reached at the end of 2016.

16%

Sublease

High-quality sublease space ready as-is for occupancy has been gradually taken up in the last two years. Yet, several large blocks that are still on the market, both in the downtown and suburban areas, are having a hard time finding takers. Sublet as a percentage of total available space has climbed from 5% pre-Covid to a 16% peak early this year and has since plateaued at that level.

- 400K sf

Absorption

Deal velocity has been improving since January, as tenants who had been delaying decisions will start executing their return-to-office strategies in the fall. This positive momentum was however too weak to absorb even the modest new supply delivered over the last two quarters. Absorption year-to-date is negative 400,000 sf, which is a significant improvement from over negative 1 million sf in the first half of 2021.

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