By Erika Siegert, Senior Analyst, National Research Insights | December 2, 2020

Amid continued uncertainty caused by the global pandemic, the Montreal real estate market has shown resilience and resurgence compared to previous quarters. The third quarter saw a second lockdown in the Montreal areaand although it was less severe than the first, it highlighted the need for investors to adjust activity and preferences within to align with this new reality. Yeartodate total transaction volume reached $4.7 billion at the end of Q3 2020, which is a 27% decrease compared to the $6.4 billion recorded during the same time period in 2019. However, investments in the third quarter reached a total volume of $1.3 billion, up 12% from the second quarter but down 45% from same quarter last year. Investment activity rose to 389 transactions, a 21% increase compared to the second quarterboth indicating some signs of market recovery

Montreal Q3 property transactions

For the second straight quarter, the two most invested in asset classes were the multi-family and industrial sectors, despite year-to-date total volume dropping by 25% and 7%, respectivelycompared to 2019. With no real surprise, these two asset types have been seen by investors as resilient and stable amid the changing market conditions this year. The land sector (ICI land and residential land) has also shown consistent investment growth since the beginning of 2020, up 21% compared to year-to-date totals in 2019. The office sector continues to struggle with year-to-date investment totals reaching only $978 million, down 41% from the same period last year, due to lack of significant office assets closing since the onset of the pandemic. According to Altus Group’s Investment Trends Survey, Montreal saw increased momentum and maintained its position as the top market preferred by investors in Q3 2020, alongside Toronto. While cap rates have seen a consistent uptick over the past three quarters in the Montreal market, the current average of 4.90 is only slightly greater than the 4.88 average recorded at the same time last year. Survey results have also indicated growing investor preference for both Food Anchored Retail Strip and Suburban Multiple Unit Residential assets, reflecting potential growth opportunities within the changing market.

Montreal overall capitalization rates - Q3 2020

Notable Q3 2020 investment transactions:

Olymbec to Pure Industrial Real Estate Trust, Saint-Laurent – Industrial
Despite the economic uncertainties, Pure Industrial Real Estate Trust continued their investment strategy of acquisitions in the Montreal market. The third quarter saw them acquire a 12-building industrial portfolio from Olymbec, a very dynamic vendor during the pandemic. The portfolio was acquired for nearly $82 million, representing an aggregate price per square foot of $106. With the completion of the third quarter, Pure Industrial Real Estate Trust has now acquired 28 industrial assets in the Montreal market for $222 million.

Carrefour Langelier, Saint-Leonard – Retail
The second largest transaction seen in the quarter was the $62 million acquisition of the Carrefour Langelier shopping centre by Group Mach. This sale also included a vacant stand-alone retail building that sits on 1.26 acres adjacent to the main shopping complex, which will likely be destined for re-development at a later date.

1445-1455 de la Montagne Street, Ville-Marie – Residential Land
The third largest sale seen in the quarter was this 0.73acre surface parking lot located in the heart of Montreal. Acquired by Carttera for $48.5 million, this ideally located site will be a future residential development by the new owners. The purchaser intends for a re-development of up to 203,000 square feet of density.

6225 Northcrest Place, Côte-des-Neiges-Notre-Dame-de-Grâce – Apartment
This six-storey, 122unit apartment complex acquired by a private investor for $23.3 million was the largest multi-family asset traded this quarter. The vendor on this transaction was once again Olymbec. 

6600 Saint-Urbain Street, Rosemont-La Petite-Patrie – Office
This 157,500 square foot office and warehouse building was acquired by Canderel from Olymbec for $18 million. Ideally located in Mile-Ex district, the building is part of the Montreal Artificial Intelligence Hub. The property goes along with Canderel’s previously purchased buildings within the Mile-Ex district, 6795 Marconi Street and 153-155 Beaubien Street West, which were acquired in 2018 and 2019, respectively. 

Montreal property transactions by asset class Q3 2020

Despite market uncertainties resulting from the current global crisis, the Montreal real estate market looks poised for a rebound with performance growing quarteroverquarter. With the bid-ask disparity persisting and the need for investors to be more selective in their projects, Montreal remains a hot commodity among local and national investors.

 

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Manager, Communications
Altus Group
(416) 641 9787
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Erika SiegertSiegertresearch

Senior Analyst, National Research Insights, Data Solutions

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