Downtown is alive and well, but with less office workers
Life in Montréal’s downtown core is returning to its pre-COVID pace. Avison Young’s Vitality index shows that students have enthusiastically returned to university campuses, while many restaurants, entertainment venues and hotels are busier than in 2019, serving consumers who don't seem to be concerned yet about recession forecasts. It’s a different story for office towers, however. Only seven in 10 workers are back to the office, compared to March 2020. Tuesdays, Wednesdays and Thursdays are slightly busier, but still below their pre-pandemic levels.
While relatively small compared to 2021, the constant and consecutive increases in availability throughout 2022 have pushed rates to a record-high of 17.5%. Availability rates for class A space is nearing 18.0% and should continue to climb, as many tenants continue to downsize.
Quality sublets attract subtenants. While existing sublets are being leased, new ones continue to be listed every quarter, offsetting absorption in that segment. In other words, sublet options still abound, especially downtown where 20% of all available spaces are listed as a sublet.
Despite an abundance of supply that favors tenants, landlords have managed to keep asking rents at pre-pandemic levels, even if it means compensating with increasingly generous rental incentives.