Amazon’s departure from seven Montreal-area industrial spaces and uncertainty surrounding tariffs are clouding the outlook for the region's industrial property market.
Montreal's industrial vacancy rate of 5.2% in the first quarter was up by just 0.1% from the previous quarter after increasing an average of 0.6% in each quarter last year, according to a recent report issued by Avison Young. "The vacancy rate is showing signs of stabilization," the brokerage said.
However, that may change quickly once all the space that Amazon left hits the market. To date, only one of the seven facilities, a 208,000-square-foot space in Longueuil, has been put up for rent. The global online retailing giant announced its decision to move out of Quebec in January following a union drive at one of its facilities, leading Amazon to fully empty out its seven locations and nearly 3 million square feet of space.
The other six Montreal-area Amazon facilities that have yet to be placed on the sublet market threaten to significantly increase the already sizable sublease supply that accounted for almost 11% of overall market vacancies in the first quarter, roughly double the 2022 rate of 4.6%, according to the Avison report.
The Amazon facilities that are expected to be added to the sublet market include nearly 500,000 square feet in Lachine and Coteau du Lac, as well as another facility about half of that size in Laval, among others.
As for new supply, only 1.5 million square feet of industrial facilities were under development in the first quarter, according to the report. That compares to 7 million square feet of space that was underway in the same period in 2023 and 5 million square feet in the first quarter of last year.
One development company is responsible for three-quarters of the ongoing warehouse construction. Montoni is building a nearly 450,000-square-foot project in Écoparc Châteauguay and another almost as large for the Mondou pet food company at its Mascouche Centroparc. The development firm also has another facility nearby that will contain over 80,000 square feet of space.
The off-island Vaudreuil-Dorion area has continued to report the highest industrial vacancy rates in the greater Montreal area. With around triple the vacancy rate of other zones, Vaudreuil-Dorion continues to cope with traffic issues tied to the replacement of a bridge in the area.
Significant Montreal industrial property transactions in the first quarter included the $20 million sale of 280 Laliberté Ave. in Candiac and a pair of other buildings at 1247 Nationale St. in Terrebonne and 1650 Lionel-Bertrand Boulevard in Boisbriand that sold together for $10.3 million.
The biggest leases in the first quarter included a deal by Intelcom, a company that has taken over many deliveries for Amazon around Montreal, for just over 400,000 square feet at 320 Saulnier Street in Laval, according to Avison Young. Also shipping firm Maersk committed to a lease more than 237,170 square feet at 11281–11299 Albert-Hudon Boulevard in Montreal, and Technologies E2IP inked a deal for a slightly smaller space at 208-240 Migneron St.