Vacancy rates in downtown Montreal’s Class A and B office buildings have remained in the six per cent range over most of the past 12 months in a leasing market where demand has slowed, according to a recent real estate market study by Newmark Knight Frank Devencore.

Approximately 1.5 million square feet is currently vacant in the downtown Class A sector, and 1.3 million square feet is available in Class B buildings.

However, with two new office towers underway and a host of other projects in the pre-development phase, the face of downtown Montreal’s office market is about to change.

“For the first time in a decade there are new office tower projects in the development and pre-development phases in Montreal’s downtown district,” says Jean Laurin, president and CEO of Newmark Knight Frank Devencore. “We are seeing increasing interest from tenants and investors in the city for older spaces and properties outside the traditional downtown core. The uptick in demand for smaller, less traditional spaces is being driven by growing businesses in the cultural, multimedia and gaming industries, for which the lower cost and cachet of the older converted buildings is a real selling point.”

Corporate real estate markets across the country also showed a slower pace of growth in 2012. The overall office vacancy rate in Canada’s major cities fell from 4.7 per cent to 4.5 per cent over the course of the year, and the amount of available space declined by approximately 245,000 square feet. Approximately 9.6 million square feet of office space is currently available for lease or sublet in the country’s downtown areas.