By Erika Siegert, Senior Analyst, National Research Insights | August 20, 2020

Montreal commercial real estate market slows in second quarter

As uncertainty continues due to the global pandemic, which saw shutdowns and work-from-home orders take place starting mid-March, the second quarter witnessed the hot Montreal commercial real estate market slow as investors cautiously maneuvered through the unpredictability. While the Montreal market saw a strong first quarter that was more reflective of the activity carried over from Q4 2019, the effects of pandemic shutdowns resulted in Q2 2020 closing with only 322 transactions and nearly $1.2 billion in total investment volume. With the completion of the second quarter, the first half of 2020 tallied 723 transactions and $3.3 billion in total investment volume. Unexpectedly, activity increased by 6% in comparison to the first half of 2019, but unsurprisingly, total investment volume decreased by 17% as a result of the lack of significant transactions this quarter.

Montreal property transactions all sectors by year H2 2020

The industrial, office and multi-residential asset classes stand out after the completion of the first half of the year as they comprised 75% of the $3.3 billion in total investment volume. The multi-residential asset class was the most invested in at $1 billion and was the lone sector reaching the billion-dollar mark in H1 2020. However, this still marks a 29% decrease compared to the same period last year. The second most invested in asset was the office sector, which registered $857 million in sales volume for the first half of 2020, a 2% increase compared to H1 2019. As e-commerce businesses thrive and industrial vacancy rates currently sit at 1.8%, there continues to be strong demand for warehouse facilities. The industrial sector recorded the biggest jump from H1 2019 with a total of $641 million in sales volume for the second half of 2020 – a 52% increase from last year. The retail sector experienced the most challenges related to the pandemic, as investors continued to face rent deferrals and shortages. The sector saw the most significant drop in investments, dipping 30% from the previous quarter and 48% when comparing the first half of 2020 to 2019. According to Q2 results of Altus Group’s Investment Trends Survey, Montreal investment momentum continues to be positive, but is declining despite a strong start to 2020, along with rising cap rates across all asset classes as the pandemic takes its toll on investment activity.

Montreal overall capitalization rates - Q2 2020

Notable Montreal investment transactions:

16 Du Commerce Place, Verdun – ICI Land
This 1.5-acre property that includes a 165,000 square foot, multi-tenant office building was a joint venture acquisition by Lachance Immobilier and Fonds Immobilier de Solidarité FTQ. The $48 million purchase was the largest transaction registered in the second quarter. The new owners are planning a redevelopment project centred around the future REM station. Groupe Mach, the vendor in the transaction, acquired the asset in December 2016 for $16.5 million.

1100 Norman Street, Lachine – ICI Land
Another notable land transaction that closed this quarter was completed by two very active players in the Montreal real estate market. This industrial land located in Lachine was sold by Manulife and was purchased by Montreal based developer Broccolini. The 11.8-acre parcel was acquired for $12.3 million to be utilized for a future industrial development. This adds to Broccolini’s long list of ongoing projects in the Montreal market.

400 Sainte-Croix Avenue, Saint-Laurent – Office
Groupe Mach was also involved in another significant deal this quarter, this time on the buy side. This 3-storey, 282,644 square foot multi-tenant office building located in Ville Saint-Laurent was purchased for $33.7 million, representing the largest office asset transaction this quarter. The building was constructed in 2000 and was sold by Provigo Properties Limited, one of the main tenants of the building.

220 Du Tremblay Road, Boucherville – Industrial
This 727,966 square foot warehouse and distribution center was the largest industrial transaction recorded in the quarter. The $35 million acquisition was made by Rona, the tenant of the property. The facility sits on just over 53 acres, providing possible expansion opportunities in the future.

1472 & 1478 Sainte-Catherine Street West, Ville-Marie – Retail
The largest retail transaction this quarter was located on Sainte-Catherine Street, the main retail strip in the city of Montreal. Built in 1956, this 17,660 square foot property was sold for $17.5 million. At the time of sale, the building was fully leased with McDonalds as one of the main tenants.

Montreal property transactions by asset class H2 2020

Investors continue to remain cautious as the effects of the pandemic unfold, but as seen over the past year, Montreal was already a highly desired market to both domestic and foreign investors. Still, the second quarter saw a predictable pause in investments take place as the effects of COVID-19 gripped the globe. With the economy slowly re-opening and the construction industry resuming in the ever-developing market, the second half of 2020 could see a respectable rebound in comparison to the first half as the market adjusts to the new reality.

 

View more insights >

 

ABOUT DATA SOLUTIONS

Data Solutions connects the Canadian real estate industry through the delivery of data with unparalleled breadth, integrity and relevance.  We cover new homes, investment transactions and commercial market inventory in key markets, and also provide intelligence on the national housing market and consumer home buying and borrowing patterns.

Our solutions are used by real estate industry stakeholders to gain market intelligence, identify and validate opportunities, benchmark, strategically plan, manage risk and more.

Data Solutions is part of Altus Analytics, the software and data solutions business of Altus Group, where our focus is to empower real estate clients and partners to work collaboratively to enhance decision making, drive performance and optimize transactional efficiency. Our solutions enable firms to better organize and manage data and connect with the right information and analytics to help them gain a complete picture of real estate assets, portfolios and transactions.

For more information on Data Solutions, please visit www.altusgroup.com/data.

ABOUT ALTUS GROUP LIMITED

Altus Group Limited is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry. Our businesses, Altus Analytics and Altus Expert Services, reflect decades of experience, a range of expertise, and technology-enabled capabilities. Our solutions empower clients to analyze, gain insight and recognize value on their real estate investments. Headquartered in Canada, we have approximately 2,500 employees around the world, with operations in North America, Europe and Asia Pacific. Our clients include some of the world’s largest real estate industry participants across a variety of sectors.  Altus Group pays a quarterly dividend of $0.15 per share and our shares are traded on the TSX under the symbol AIF.

For more information on Altus Group, please visit: www.altusgroup.com

MEDIA CONTACT:

Elizabeth Lambe
Manager, Communications
Altus Group
(416) 641 9787
elizabeth.lambe@altusgroup.com

Related posts

close
close
forumRequest a demo
close
close

Thank you for contacting us. we will get back to you shortly!

This site uses cookies to improve your user experience. By using our website, you are agreeing to our use of cookies.
Click here for more information.