Over the last six months, downtown Montreal’s Class A and B office buildings have seen an increase in vacancy rate, with Knight Frank Devencore reporting rates up to 6.8 per cent from 6 per cent.

The firm’s Real Estate Market Study pegs negative absorption at approximately 400,000 square feet. This puts the total of available Class A and B office space at 3.2 million square feet. The news comes on the heels of a report by Jones Lang LaSalle that suggests Montreal’s industrial market is also lagging.

“While vacancy rates in the corporate sector are creeping up in downtown Montreal, real estate activity continues to take place at a pace we haven’t seen for many years,” says Jean Laurin, president and CEO of Newmark Knight Frank Devencore. “There are a number of new projects currently being developed, and other projects that are either about to begin construction or are in the pre-leasing stage. In addition, a number of areas are being redeveloped.”

Laurin points to Griffintown, Mile End and Jean Talon as some of the neighbourhoods experiencing significant rejuvenation. “As the revitalization projects proceed, these neighbourhoods will become more attractive to landlords and developers, as they offer prime real estate in close proximity to the downtown core,” he says.

Laurin predicts that the construction activity will shake up the downtown district and its surrounding areas, providing tenants “with more leasing opportunities, and more negotiating leverage, than they have enjoyed in a number of years.”