Already at a 20-year high, the proportion of empty offices in downtown Montreal has not stopped increasing, reveals a study.
Posted at 6:00 a.m.
In a worst-case scenario, the city center’s diminishing appeal to service workers will help empty the equivalent of 11 skyscrapers like Place Ville Marie, according to a document released Friday by the Board of Trade of Metropolitan Montreal (CCMM).
This study complements the previous one of February 25, which focused on new ways of organizing work and consumption in the city centre. This deals more specifically with the management of surplus offices.
Without considering other factors, the downtown area would thus end up with surplus office space of 107,550 square meters (or 11.4 million square feet). The downtown office vacancy rate, currently at a 20-year high of 15.8%, could rise to 21%. Before the pandemic, the rate stood at just 5.4%.
Downtown is hit from two sides
First, the popularity of telecommuting is having a downward impact on the demand for office space downtown. “By 2022, the adoption of hybrid work models will reduce the number of workers present daily in the city center by 19 to 25%”, is it written in the document whose drafting was inspired in particular by a survey of 255 start-ups and SMEs.
The potential shock to office demand is likely to be spread over time because around 7% of leases expire per year, he points out.
Double misfortune, in this crisis of demand, the city center will see the delivery of new office towers in the same period, which will add a total of 147,000 square meters (or 1.58 million ft²) to the inventory. . One thinks, among other things, of the new head office of the National Bank.
However, the CCMM is convinced that the reality will be less dramatic because Montreal is attracting foreign investment and some of the downtown businesses are growing. However, the older office buildings, the so-called category B and C, will suffer.
In order to limit the damage in the short and medium term, the Chamber is proactive and proposes Spaces and Co., a virtual marketplace that will facilitate collaboration between companies with excess office space and companies looking for office space, especially SMEs and growing start-ups. The goal is to “build on the competitive advantages of the city center, such as prestige and its accessibility to public transport and to revitalize workspaces”, we read in the study.
Looks like “save-who-can”
In the first quarter of 2022, large companies were not shy about putting large areas back into subletting, observes the real estate agency CBRE in its most recent report on the state of the market in the city center. The equivalent of two towers such as 1000 de la Gauchetière are currently available for subletting in the business district. Laurentian Bank, increasingly managed from Toronto, has freed up 10,800 m² (or 116,000 ft²) for sublease at 1360 René-Lévesque Boulevard West. As another example, Shopify of Ottawa has handed over 11,350 m² (or 122,000 ft²) of office space to sublease at 525 Viger Avenue West. “Several large offices have been vacated as companies have tried to downsize to provide a flexible work environment,” CBRE explains.