Newmark Knight Frank Devencore

Newmark Knight Frank Devencore

October 22, 2009 07:00 ET

Tenants Retrenching in Downtown Montreal Office Market

Vacancy Rate Jumps Throughout Canada's Major Cities

MONTREAL, QUEBEC--(Marketwire - Oct. 22, 2009) - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that vacancy rates continued to rise in downtown Montreal's office buildings in the first six months of 2009. As was the case throughout the country, business growth came to a virtual halt while the effects of the global financial crisis made themselves felt and tenants began retrenching or putting plans for expansion on hold. Combined Class "A" and "B" vacancy rates in downtown Montreal increased to 7.4%, up from just 4.9% a year ago. Approximately 3.4 million square feet of office space is currently vacant.

"According to most economic indicators, Montreal was not as hard-hit by the recession as many other cities in the country," said Jean Laurin, President and CEO of NKF Devencore. "The local economy is well-diversified, and so it is somewhat protected from sudden downturns in specific sectors. There is also a sense locally that the worst of the recession is over, and that the projected ramp up in infrastructure spending will soon begin to help re-energize the local economy. Nevertheless, vacancy rates are higher than they have been at any point since the end of 2006. As a result, the downtown Montreal office market currently offers a substantially broader range of lease and sublease opportunities than was the case only 18 months ago. This is good news for those tenants who are in a position to locate or to expand their operations in the downtown core. However, large blocks of contiguous space may still be a challenge to find at advantageous rental rates."

In Canada's other major urban centres vacancy rates have also risen significantly. Some cities have been more dramatically and immediately impacted than others; the sharpest increases in office space availability occurred in Vancouver and Calgary, mirroring the precipitous weakening of demand in the resource sectors. Until the recession hit the office market in most of the country was weighted in favour of landlords, but the jump in vacancy rates should loosen up the markets in most major cities and offer more options to those tenants who have been seeking new leasing arrangements.

"In the months ahead, many tenants and their real estate advisors will be focussing on strategies to utilize their spaces most efficiently, to leverage their position as important tenants and/or to create value with underutilized assets," Mr. Laurin said.

About Newmark Knight Frank Devencore

Devencore is the Canadian partner of Newmark Knight Frank, one of the largest independent real estate service firms in the world. Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution.

Headquartered in New York, Newmark Knight Frank and London-based partner Knight Frank operate from over 200 offices in established and emerging property markets on six continents. Last year, transactions were valued at more than $32 billion with annual revenues of over $811 million. With a combined staff of more than 6,300, this major force in real estate is meeting the local and global needs of owners, tenants, investors and developers worldwide.

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