There have been few significant office tower transactions across Canada over the past two years, but a just-completed deal in downtown Montreal has bucked that trend.
Groupe Mach has purchased a 17-storey, 256,574-square-foot property at 1600 Rene-Levesque Blvd. W. from BentallGreenOak for an undisclosed price in an off-market transaction brokered by CBRE.
Among the B-class building’s tenants are WSP, federal and provincial government offices, a variety store and a coffee shop. It also houses a police station on a long-term lease.
There are four current vacancies, according to BentallGreenOak’s web page for the commercial-zoned building.
The site also includes a vacant two-storey office building and a small parcel of land zoned mixed-use that could potentially be used for a future multi-family development.
Both Groupe Mach and BentallGreenOak declined requests by RENX to be interviewed for this article, but it appears the vendor is looking to reduce its office allocation while the purchaser has been one of the most active acquirers in the market in recent years.
In a previous interview with RENX, Groupe Mach president Vincent Chiara said the company remained confident in the office sector coast-to-coast, and was actively expanding its portfolio.
Mach bought major properties in Toronto (the 922,000-square-foot Atria complex), Halifax (1801 Hollis St., as well as Metropolitan Place in neighbouring Dartmouth for a total of $70 million) and Ottawa (ONE60 Elgin for $277 million) during a year-long buying spree that also included multifamily and retail assets. Many of the deals were in partnership with Sarees Investments.
High vacancies in Montreal office market
The Canadian office market has been relatively weak since the onset of the COVID-19 pandemic in 2020, with a large increase in people working from home. While many trophy assets continue to perform well, B- and C-class buildings have been hit particularly hard.
The Montreal office vacancy rate was 18.8 per cent in the second quarter, about three times higher than it was at the beginning of this decade, according to a recent CBRE report. The vacancy rate was 22.9 per cent for B-class buildings.
There are few indications that there will be a spike in distress sales, however, as most large office building owners are well-capitalized institutions that can afford to ride out the current downturn in hopes that it will rebound.
While 1600 Rene-Levesque has 150 underground parking spaces, it’s not directly connected to a Metro station. It is, however, located two blocks south of the Guy-Concordia station and two blocks northwest of the Lucien L’Allier station and served by surface public transit.