West Island of Montreal Industrial Real Estate in the Current Canadian Economy

A brief by John Burrascano, Industrial Commissioner

Here we are, in the second wave of the COVID-19 crisis. I’m seated at my desk writing the present report. I’m asking myself, what am I going to discuss in this report about the status of West Island of Montréal industrial real estate performance? I’ll tell you, it crossed my mind numerous times to simply put down on paper one word and nothing else and most would easily understand--that word is, Coronavirus. With all the negative connotations revolving around this word, however, when it comes to the Greater Montréal Metropolitan Area’s (GMA) industrial real estate performance, there is some surprisingly good news.

Getting back to reality, the Coronavirus of 2020 has permeated virtually every aspect of our lives. It has caused the North American and global economy to sputter-out and decline dramatically only to be held afloat by important governmental intervention. Governments have had to pour billions of dollars into their economies to beef-up their healthcare systems as well as provide assistance to companies, families, and individuals so that they can survive financially by help them bridge the gap to improved economic times.

Société des Caisse Desjardins bank (2020) points out that by the end of the first wave of the Coronavirus, preliminary statistics for August, 2020 indicated that Canada’s economic growth had picked-up speed. They forecast, however, that the situation will deteriorate by the fourth quarter of this year as the expected second wave occurs forcing the province of Québec and other provinces to reinstate selected pandemic-related restrictions on business and people.

What does this economic and societal mess mean for Montréal and West Island industrial real estate?

CBRE (2020) reports that as at Q2, 2020, the GMA’s industrial real estate market was basically sheltered from the negative economic fall-out and associated governmental lockdown measures of the Coronavirus pandemic posting a positive absorption of 111,091 square feet. This is certainly good news but noticeably dampened performance than recent past quarters. The same report highlights that wholesale businesses, e-commerce, the food and beverage industry, manufacturing, and distribution and logistics led the way in the demand for industrial space.

It remains to be seen what the effects of the second wave of the pandemic will be on the GMA’s industrial market. As at the third quarter of 2020, Colliers International indicates that the vacancy rate for the West Island stood at 1.1 percent. Lachine’s was 1.5%. For comparative purposes, the rate was 1.4% for the GMA. Let’s not forget that these vacancy rates are record lows. Hopefully, they can be maintained or improved during the pandemic crisis.

Montréal’s and West Island’s industrial real estate market remains stable in a very harsh economic and social reality stirred-up by the Coronavirus pandemic.

Defying the odds, but not out of the woods

Certainly, the second wave of the pandemic causes much concern as to how long the good industrial market performance can be sustained. That will depend on how the virus shall progress and on how long it will last.  This particular market has until now defied the odds, but we’re not out of the woods yet as the pandemic continues and can still hurl surprises ultimately shaking the demand for industrial space.

We can only hope for a quick finalization and distribution of a vaccine, fending-off further threats to the industrial market as well as wider society.

Bibliography

 CBRE. "Industrial Proves it Can Weather the Storm". Marketview—Montréal Industrial, Q2, 2020 : 1

Colliers International. "Greater Montreal Area Industrial Market Report", Q3, 2020 : 3.

Société des Caisse Desjardins. "Economic News", Desjardins Economic Studies, September 30, 2020.