As the Industrial and Apartment Sectors Intensify, the Fight for Available Land on the Island Continues
The Greater Montreal area is well positioned to drive investment activity from local and global investors into the region. With egregious increases in asset prices and rental rates, combined with limited supply in other prime markets like Toronto and Vancouver, Montreal produces an opportunity for investors to secure real estate acquisitions at competitive prices. Unlike Toronto and Vancouver, the absence of a foreign buyer tax in Montreal also makes the region a target market for foreign investment.
The industrial sector continues to be very active, with the recent bulk purchase of nine properties by Fiera from Investors Group and the purchase of three premier Laval properties by GWL Realty Advisors. Momentum in the apartment sector has also picked up in the region, attracting a variety of buyers – from private capital to foreign purchasers. The diversification of subtype assets continues to expand across the market; the top transactions in terms of dollar volume since the start of 2018 were the purchases of a student housing complex and two seniors residences – an emerging asset type that is attracting increasing attention from investors. Investment in land transactions in Q2 2018 has recently slowed down after a 2017 improvement. The main driver is the scarcity of available land on the Island, making Laval – the third largest submarket in the region – a better option with cheaper per square foot land. Moreover, Montreal has seen an increase in joint venture acquisitions, a way for investors to mitigate their risks and facilitate financing. With more availability in downtown office and industrial space, vacancy rates in Montreal are also higher compared to those in Toronto. Montreal’s demand for office space remains stable, spurred by companies seeking talent from its robust, multi-skilled workforce as the emerging AI, bio-tech and multimedia sectors grow.
With the intensification of the industrial and apartment sectors, competitive price levels and the continuing fight for available land on the Island, we anticipate investors to begin adapting their asset acquisition and development strategies to the changing landscape.
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