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Investment Insights
Montréal | H1-2015
Market insights for the real estate investor.
Overview 4Multi-residential 10Office 13Retail 16Industrial 19Land 22Forward-Looking Trends 25
In this report
Market Overview
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 5
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
Industrial Office Retail Multi-Residential Land
H1 - 2014 H1 - 2015
Althoughmarginal,Montréalexperiencedpositiveeconomicgrowthinthefirsthalfof2015withexpectationsthatitsperformancewillremainstableduringtheremainderoftheyear.TheincreaseinQuébec’semploymentmarketalongwithlowoilpricesandaweakeningCanadiandollarhaveallhadpositiveeffectsonthemarket.Thesefactorshavedirectlycontributedto thegrowthof the realGDP, from1.4percent in2014 to1.8percentin2015.Thisaccelerationisexpectedtogrowinto2016andisonpaceto reach 2.0 percent. Themanufacturing sector continues to thrive asQuébec’s trade sector is experiencing significant growth in exports, inparticular toU.S.markets.Results from the Institut de laStatistiquedeQuébec(ISQ)showthatrealmerchandiseexportswereupbymorethan10percentinQ12015ascomparedtothesametimelastyear.Foreigntrade will remain a key driver to Quebec’s economic success for thesecondhalfof thisyearand through to2016.Québec’s jobmarkethasalsohaspickedup significantly after seeinganoverall net decreaseof0.7percentin2014.Therewere50,000netnewjobsaddedtothemarketthroughout thefirstquarterof thisyearwhichshould result in improvedhouseholdandconsumerspending.
Fromadevelopmentstandpoint,thecityofMontrealsawaflurryofactivityin the construction sector including some of the largest infrastructureprojectsinrecentdecades.Thecityhasrecentlydeliveredthe$1.3billion
McGillUniversityHealthCentre(MUHC)superhospitalandthe$2billionCentre Hospitalier de l’Université de Montreal (CHUM) super hospital.OthermajorprojectsincludetheconstructionofabrandnewChamplainBridge, the overhaul of the Turcot interchange as well as a significantnumberof large condoandofficedevelopments in thedowntowncore.Earlier this year, theprovincialgovernmentannounceda transformativenewdealgivingpensionfundCaissededépôtcontrolandresponsibilityoveritsfutureinfrastructureprojects.
Overview
24%
8%
30%
21%
17%
Industrial
Office
Retail
Multi-Residential
Land
H1-2014 Versus H1-2015 Sales Volume ($ million)
Sales Volume by Asset Type – H1-2015 Sales Volume by Asset Type – H1-2014
10%
28%
31%
15%
16%
Industrial
Office
Retail
Multi-Residential
Land
Source:CollettePlante,JLR,RCA
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 6
REIT OutlookWith cap rates remaining stable and hovering at historical lows, themajority of REITs have been able to avoid any significant decrease intheir property values. However, if cap rates fail to compress further,REITswillbechallengedtofindinvestmentsthatmeettheircurrentyieldrequirements.Expecttoseeareturntomoretraditionalstrategieswheregrowth and valuewill need to comeprimarily from increases in bottomlineNOIandcashflows.REITswilllikelyneedtoturntheirfocustonewdevelopment and redevelopment strategies on existing assets over the next several years in order to drive portfolio values. Going forward, moreestablishedCanadianREITswilllikelylooktoselloffsomeoftheirnon-core assets to focus on improving their current portfolios and ondevelopingnewpropertiesratherthanstrictlybuyingexistinginventory.
During the first half of 2015,manyREITS tradedbelow their net assetvalue (NAV), which will result in an increased number of mergers andacquisitions of smaller REITs going into the second half of the year.REITS’overallperformanceforthefirsthalfof2015hasbeenfairlypoor.TheS&P/TSXREIT Indexexperienceda total returnof -5.0percent forQ2-2015whereastheS&P/TSXCompositeIndexhasdeliveredareturnof -1.6 percent and returns of -2.5 percent for 10-year Government ofCanada bonds (GoCs). S&PCapped Index’s negative performance isexplained by the fact that 78 percent of CanadianREITS have postednegativereturnsduringQ2.
Five(5)Year 10-Year Long TermJun-15 0.95% 1.77% 2.38%Jun-14 1.57% 2.26% 2.82%Jun-13 1.84% 2.50% 2.96%
A Deal B Deal CDealFive(5)year GoC+160 GoC+225 GoC+350
Government Bond Yields
Commercial Mortgage Rates
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
0
2
4
6
8
10
12
14
16
2006-Q1
2006-Q2
2006-Q3
2006-Q4
2007-Q1
2007-Q2
2001-Q3
2007-Q4
2008-Q1
2008-Q2
2008-Q3
2008-Q4
2009-Q1
2009-Q2
2009-Q3
2009-Q4
2010-Q1
2010-Q2
2010-Q3
2010-Q4
2011-Q1
2011-Q2
2011-Q3
2011-Q4
2012-Q1
2012-Q2
2012-Q3
2012-Q4
2013-Q1
2013-Q2
2013-Q3
2013-Q4
2014-Q1
2014-Q2
2014-Q3
2014-Q4
2015-Q1
2015-Q2
10yrQuarterlyGOCYield S&P/TSXCappedREITIndex YieldSpread
Bond Versus REIT Yields
Source:BankofCanada
The continued drop in oil prices combined with the Bank of Canada’sinterest rate cut at the beginning of this year resulted in a significantdecreaseinthe5-yearGoCbondyield,whichhoveredaround0.8percentattheendofQ1-2015.However,the5-yearGoCyieldincreased13bpsthrough thesecondquarter, resulting inanoverall returnof0.9percentforH12015.Mortgageratesfollowedtheupwardtrendinbaseratesandincreasedby12bpsto2.6percentinJune,resultinginaloanspreadof170bpsforH12015.
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 7
Daily REIT Pricing
6/29/2015 6/26/2015 3/29/2014 12/29/2014 6/29/2014 Market Cap
Monthly Div DivYield
Close Close % Change
3-Month-Close
% Change
6-Month Close
% Change
12-Month-Close
% Change
RiocanREIT 26.35 26.86 -1.94% 29.47 -11.84% 27.16 -3.07% 27.31 -3.64% 9.33B 0.12 5.46%H&RREIT 22.11 22.35 -1.09% 23.43 -5.97% 22.03 0.36% 23.16 -4.75% 6.85B 0.11 5.97%CallowayREIT 28.35 29.00 -2.29% 29.89 -5.43% 27.93 1.48% 26.56 6.31% 4.05B 0.13 5.50%CREIT 42.07 43.05 -2.33% 46.88 -11.43% 46.20 -9.82% 45.99 -9.32% 3.41B 0.15 4.28%Boardwalk REIT 55.88 57.22 -2.40% 59.84 -7.09% 52.54 5.98% 61.11 -9.36% 3.13B 0.17 3.65%CominarREIT 17.58 17.92 -1.93% 19 19 -9.16% 18.85 -7.22% 18.85 -7.22% 3.21B 012 8.19%CAPREIT 27.22 27.91 -2.53% 29.88 -9.77% 25.67 5.69% 22.86 16.02% 3.29B 0.10 4.41%Allied Properties REIT 34.81 35.66 -2.44% 40.97 -17.70% 38.01 -9.19% 34.76 0.14% 3.15B 0.12 4.14%DreamOfficeREIT 24.14 24.95 -3.36% 26.25 -8.74% 25.63 -6.17% 29.29 -21.33% 2.94B 0.19 9.44%Artis REIT 13.38 13.76 -2.84% 14.98 -11.96% 14.50 -8.37% 15.75 -17.71% 2.05B 0.09 8.07%CrombieREIT 12.39 12.56 -1.37% 13.43 -8.39% 12.99 4.84% 13.26 -7.02% 1.76B 0.07 6.78%Morguard REIT 16.23 16.34 -0.68% 17.40 -7.21% 18.35 3.06% 17.76 -9.43% 1.09B 0.08 5.91%DreamGlobalREIT 9.91 10.02 -1.11% 9.84 -0.71% 8.60 13.22% 9.48 4.34% 1.12B 0.07 8.48%ChoicePropertiesREIT 10.61 10.83 -2.07% 11.34 -6.88% 10.59 0.19% 10.59 0.19% 1.02B 0.05 5.66%Dream Industrial REIT 8.16 8.25 -1.10% 9.08 -11.27% 8.43 -3.31% 8.53 -4.53% 528.41M 0.06 8.82%RetrocomREIT 3.52 3.57 -1.42% 3.93 -11.65% 3.93 -11.65% 4.60 -30.68% 303.52M 0.04 13.64%
Expect to see REITs return to more traditional strategies
where growth and value will come primarily from
increases in bottom line NOI and cash flows
Source:Yahoo!Finance
JLL | Montréal | Capital Markets InvestmentInsights|H1-2015|Page8
Cap RatesQ4-2012 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Trend
OfficeDowntown
DowntownClassA 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.50%DowntownClassB 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.25%
MidtownClassA 6.75% 6.75% 6.75% 6.75% 6.75% 6.75% 6.50%ClassB 7.25% 7.25% 7.25% 7.25% 7.25% 7.25% 7.00%
SuburbsClassA 6.75% 6.75% 6.75% 6.75% 6.75% 6.75% 6.50%ClassB 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.25%
RetailRegionalShoppingCentres 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 4.75%Sub-regionalShoppingCentres 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.25%
Power CentresDominantPowerCentres 6.50% 5.75% 5.50% 5.50% 5.50% 5.50% 5.50%
Community ShoppingCentres 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 7.75%NeighbourhoodCentres 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.50%
ApartmentsTopQualityApartment 5.00% 4.50% 4.50% 4.50% 4.50% 4.50% 4.25%Other Apartment 6.00% 5.50% 5.50% 5.50% 5.50% 5.50% 5.25%
Senior HomesApartments 6.75% 6.75% 6.75% 6.75% 6.75% 6.75% 6.50%Room and Board 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.00%
IndustrialMulti-Tenant 8.00% 8.00% 8.00% 8.00% 8.00% 7.75% 7.50%Single-Tenant 7.25% 7.00% 7.00% 7.00% 7.00% 6.75% 6.50%
Cap RatesAppetiteforinvestmentgraderealestateremainsveryhighacrossQuébecwhichhasbeenevidencedbynumberofsignificanttrophytransactionsinthelast12-18monthsandseveralmoresettoclosein2015.Withinterestrateshoveringathistoriclowsandexpectationsofafurtherdecrease,capratesremainattheirhistoriclowacrossmostassettypesinthefirsthalfof2015withapotentialforfurthercompressionamongstsomeassetsin2015.
ClassAofficebuildingsinthedowntowncorearetradingbetween5.0and5.50percentwhileClassAsuburbanofficeassetsareaveragingbetween6.25and6.75percent.Theretailsectorhasalsoexperiencedthiscompressionwithregionalgroceryanchoredcentrestransactingaslowas5.0percentwhiledominantpowercentresrangedanywherebetween5.50and6.00percent.Themulti-residentialsectorremainsthelowestyieldingasset,withtopqualityconcretebuildapartments transactingas lowas4.75percentandClassAbrickandwoodapartmentassets tradingbetween5.25and5.75percent.Industrialcapratescompressedbyapproximately25bpswithsingletenantbuildingsaveragingbetween6.25and6.75percentwhilemulti-tenantassetstradedbetween7.25and7.75percent.
Source:DesjarlaisPrévost
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 9
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Q4-2010 Q4-2011 Q4-2012 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015
Office-DowntownA Office-DowntownB RegionalShoppingCentresDominantPowerCentres TopQualityApartment(Concrete) TopQualityApartment(Brick/wood)Industrial - Multi-tenant Industrial-Single-tenant
Cap Rate Trends
With interest rates hovering at historic lows and
expectations of a further decrease, we can expect cap
rates to remain near their historic lows
Multiresidential
The multi-residential market experienced a significant
increase in investment volumes quarter over quarter, as sales for Q2 2015 reached approximately $179 million.
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 12
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
Q12013 Q22013 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015
The multi-residential market experienced a significant increase ininvestmentvolumesquarteroverquarter,assalesforQ22015reachedapproximately$179million,representingan18percentincreaseoverQ1.Thetrendheldtrueforthefirsthalfof2015,assalesvolumestotaled$330million, incomparisonto$312millionfor thesameperiod lastyear(a6percentincreaseyearoveryear).Thisgrowthismainlyattributabletothesignificant increase in thenumberof transactions fromQ1toQ2.Therewereatotalof50transactionsformulti-residentialassetsthisquarter,ascomparedtojust29forthisyear’sfirstquarter.Theaveragepriceperunitremainedrelativelystableandsatatapproximately$103,500perdoorforQ22015for transactionsofover$1millionacrosstheGreaterMontréalArea(GMA).
Themostnotabletransactionofthequarterwasthesaleofa6-propertyportfolio located inSherbrooke,whichsold fora totalpurchasepriceof$12,934,996.Theportfoliocontained306units,representingapriceperdoorcostof$42,271.23.Anotherimportanttransactionthisquarterwasthesaleofa6-propertyportfoliototaling99unitsforatotalpurchasepriceof$11,890,000or$120,101perunit.CapratesforapartmentbuildingsinMontréalcompressedfurthergoingintothefirsthalfof2015.
Cap RateTop Quality Concrete 2015: 4.50% 2014: 4.75%Top Quality Brick/Wood 2015: 5.25% 2014: 5.50%
Sales VolumeH1-2015: $330 million | H1-2014: $312
Number of TransactionsH1-2015: 79 | H1-2014: 106
Multi-residential
Notable Transactions
Six-Property Portfolio, SherbrookeVendor: Gestions Portland Vimy Inc.Purchaser: 9317-9745 Quebec Inc.Sale price: $12,934,996.00 Number of Units: 306Price per Door: $42,271.23
Three-Property Portfolio, CharlemagneVendor: Archambault PierrePurchaser: Kamax IncSale Price: $11,890,000.00 Number of Units: 99Price per Door: $120,101.01
Portfolio (144 units)Vendor: Immeubles Immogest Inc.Purchaser: 9321-3775 Quebec Inc.Sale price: $9 500 000Number of units: 144Price per door: $65,972.22
Multi-Residential - Sales Volume ($)
Source:CollettePlante
Office
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 14
OfficeThe Montréal office market, currently comprised of over 820 officebuildingsand94.6millionsquarefeetofspaceissettoseesignificantexpansionoverthenext12to24months.Bytheendof2017,wecanexpect another 2.6 million square feet of space coming to market,half of which in the downtown submarket. Approximately 1.5 millionsquare feetofofficespace isset tobedelivered in theGMAbyyearend.Thisincludes,mostnotably,CadillacFairview’srecentlydelivered495,000 Platinum LEED certifiedDeloitte tower. From an investmentperspective, sales volumes for the second quarter of 2015 slowedsubstantiallytoreachatotalof$58million.Weexpectthesevolumesto increase substantially in the second half of the year as severalClassAinvestmentgradeofficeassetshaveandwillbecomingtothemarket.Mostnotably,the507,000squarefootKPMGtowerisexpectedto close this year with price expectations nearing a 5.0 percent caprate.Additionally, the iconicWestmountSquarehasalsobeenputonthemarket and garnered significant investor interest. On offer is the195,000 square foot office tower, a 54,000 square foot pavilion and80,000squarefeetofretailspace.
Capratesfurthercompressedfortopqualityofficeassetsgoingintothefirsthalfof2015.DowntownClassAofficebuildingstransactedbetween5.25and5.50percent.ThesameholdstrueforClassAsuburbanofficewhichtradedbetween6.5and7.0percent.TheappetiteforinvestmentgraderealestateinMontréalcontinuestoattractlargerinvestors.Oneofthemajortransactionsearlierthisyearwasthe717,000squarefootoffice-industrialsale-leasebackofAldo’sheadquartersinSaintLaurentwhichsoldtotheCanProGroupforanoverallcaprateof6.0percent.Another notable transaction was the acquisition by Nobel REIT of955 Michèle Bohec Boulevard located on Highway 15 in Blainville’sbusinesspark:The34,640squarefootfullyleasedofficebuildingwasacquiredfor$7,250,000or$209persquarefoot.
Notable Transactions
215-235 Chabanel Street West, MontréalVendor: Multi-Chabanel Holdings Inc.Purchaser: 225 Chabanel S.E.C.Sale price: $27,100,000
955 Michèle-Bohec Boulevard, BlainvilleVendor: Immeubles Hubert Dorris Inc.Purchaser: Nobel REITSale price: $7,250,000
1600 Montgolfier Street, LavalVendor: Crescendo Properties Holdings CorporationPurchaser: Nobel REIT Limited Partnership Sale price: $5,200,000
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
Q12013 Q22013 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015
Office - Sales Volume ($)
Source:CollettePlante
Cap RateClass A - Downtown 2015: 5.50% 2014: 5.75%Class A - Suburban 2015: 6.50% 2014: 6.75%
Sales VolumeH1-2015: $125 million | H1-2014: $608 million
Number of TransactionsH1-2015: 24 | H1-2014: 40
Approximately 1.5 million square feet of office space is
set to be delivered in the GMA by year end. This includes,
most notably, Cadillac Fairview’s recently delivered
495,000-square-foot Platinum LEED certified Deloitte tower.
Retail
The most notable transaction this quarter was Calloway
REITs $1.16 billion acquisition of SmartCentres, a 24-property portfolio which included 6 centres in Québec.
JLL | Montréal | Capital Markets InvestmentInsights|H1-2015|Page18
$-
$100,000,000
$200,000,000
$300,000,000
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
$1,000,000,000
Q12013 Q22013 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015
RetailTheretailinvestmentmarketremainedstableinthesecondquarterof2015,whichendedwithatotalsalesvolumeof$237milliontoroundoutthehalf-yearmarkatapproximately$485million.Thetotalnumberoftransactionsalso remained healthy, with the average number of transactions fallingbetween35and40forinvestmentsover$1millionintheGMA.Onacapratebasis,themarketexperiencedaslightcompressioninthefirsthalfof2015:Grocery-anchoredregionalshoppingcentrestradedbetween4.75and5.25percent,dominantpowercentersbetween5.25and5.5percentandneighborhoodcentrestransactedbetween7.25and7.75percent.
The most notable transaction this quarter was Calloway REITs $1.16billion acquisition of SmartCentres, a 24-property portfolio whichincluded6centres inQuébec.TheportfoliowillberenamedSmartREITand will make Calloway one of Canada’s largest retail landlords. Inaddition, theportfolio includesasubstantial retail developmentpotentialof approximately 1.9 million square feet of gross leasable area. Thepropertiesareprimarily located inOntarioandQuébecand themajority(16)of them,areanchoredbyWal-Martstores.Thepropertiesare99.7percentoccupiedwithanaverageweightedleasetermofapproximately12.6years.OfthesixpropertieslocatedinQuébec,allwerefullyacquiredwiththeexceptionofMirabel’sPremiumOutletswhichCallowayacquireda25percentstake,representingavalueofapproximately$18million.ThetotalvalueoftheQuébecpropertiesexceeds$116millionandrepresentsmore than525,000square feetofgross leasablearea.Anothernotabletransaction was the $8.75 million acquisition of Place La Citière inBrossard:Theapproximately122,000-square-footcentre isanchoredbyMaxiandincludesnationaltenantsJeanCoutu,SAQandNationalBank.
Notable Transactions
4745-4769 Dagenais Boulevard West, LavalVendor: 9227-1758 Québec Inc.Purchaser: Placements SOM Inc. Sale Price: $8,500,000
Smart Centres Portfolio (of which, 6 properties are in Québec)Vendor: SmartCentresPurchaser: Calloway REITSale Price: $1.16 billion ($116 million in Québec)
50 Taschereau Boulevard, La PrairieVendor: Elad CanadaPurchaser: Gotham Deraker Developments Inc.Sale Price: $8,750,000
Retail - Sales Volume ($)
Source:CollettePlante
Cap RateRegional Shopping Centre 2015: 5.00% 2014: 5.25%Dominant Power Centre 2015: 5.25% 2014: 5.50%
Sales VolumeH1-2015: $484 million | H1-2014: $661 million
Number of TransactionsH1-2015: 75 | H1-2014:107
Industrial
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 20
IndustrialThe industrial market saw a slight decrease in investment volumesquarteroverquarter,assalesforQ22015reachedapproximately$177million. However, sales volumes year to date totaled $376million, incomparisonto$215millionforthesameperiod lastyear,representingan impressive 75 percent increase year over year. This increase canmainlybeattributed toseveral larger industrial transactions in thefirsthalf of 2015. Notably, Cominar’s $34.5 million acquisition of a three-propertyportfolio inLachine,totaling700,000squarefeetrepresentingapproximately$50persquarefoot.TheacquisitionispartoftheREIT’sdiversificationstrategy,whichbeganlastyearandwhichhasledthefirmtoacquiremorethan$2billioninassets.
Anothermajortransactionwasthesale-leasebackofSobeys’corporatehead office and distribution centre located in Montréal-North. Theapproximate550,000-square-footpropertysoldforatotalpurchasepriceof$29.5millionrepresentingapproximately$54.00persquarefoot.Theunique transaction included a 15-year sale-leaseback on the 154,000squarefootfrontofficecomponentofthebuilding,anadditional10-yearsale-leaseback on the 113,000 square foot freezer and refrigeratedspacewhilethefinal265,000squarefeetofwarehousespacewassoldvacant.
Additionally, Nobel REIT acquired a three-property multi-tenantindustrialportfolio totaling116,157square feet located inSaint-HubertalongHighway30.Theportfoliowas97.4%leasedtoadiversifiedmixof tenants andwas sold for a total purchaseprice of $10.7million or$92.00persquarefootontheleasablearea.
Notable Transactions
Three-Property Portfolio, LachineVendor: IGRI Industrial Fund GP Ltd.Purchaser: Cominar REITSale price: $34,500,000
11281-11299 Albert Hudon Boulevard, Montréal-NorthVendor: Sobeys Québec Inc. Purchaser: 11281 Albert Hudon Investments Ltd.Sale price: $29,150,000
Three-Property Portfolio, Saint-HubertVendor: Flatiron Holdings Inc.Purchaser: Nobel REITSale price: $10,700,000
Cap RateSingle-Tenant 2015: 6.75% 2014: 7.00%Multi-Tenant 2015: 7.75% 2014: 8.00%
Sales VolumeH1-2015: $376 million | H1-2014: $215 million
Number of TransactionsH1-2015: 61 | H1-2014: 59
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
Q12013 Q22013 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015
Industrial - Sales Volume ($)
Source:CollettePlante
The industrial market experienced several large investment transactions this quarter including
the 551,000-square-foot sale-leaseback of Sobey’s corporate head office and
distribution centre.
Land
The land market saw a major increase in investment volumes quarter over quarter, as sales for Q2 2015 reached approximately $149 million
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 24
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
Q12013 Q22013 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015
LandThelandmarketsawamajor increasein investmentvolumesquarteroverquarter,assalesforQ22015reachedapproximately$149million,representing a 23 percent increase over the previous quarter. ThenumberoflandtransactionsintheGMAincreasedsignificantlyquarterover quarter with a total of 28 transactions in Q2 versus 17 for thepreviousquarter.
One of the more notable transactions this quarter was the 40,600square foot acquisition of land located at the crossroad of Old-Montréal andGriffintown by local developerPrével.The sitewill seethe construction of the second phase of the already successful 21eArrondissement mixed-use development. The second phase willincludeamixofcondosandrentalapartmentsspanning14storeys.
One of the larger land transactions this quarter was the acquisitionof 2.3million square feet of single-family residentially zoned land byQuartierdel’Ouest-de-l’Ilefor$13.1millionor$5.50persquarefoot
Notable Transactions
William Street / Duke Street, MontréalVendor: Investissements Kilmar Inc.Purchaser: Développpements du 21e Inc.Sale Price: $11,179,981
Gouin Boulevard WestVendor: Société immobilière Juttian Inc.Purchaser: Quartier de l’Ouest-de-l’IleSale Price: $13,170,548
75-77, d’Edmonton Street, GatineauVendor: Le Manoir du Casino Hull-Ottawa Inc.Purchaser: 6248420 Canada Inc.Sale price: $14,250,000
Land - Sales Volume ($)
Source:CollettePlante
Sales VolumeH1-2015: $270 million | H1-2014: $347 million
Number of TransactionsH1-2015: 45 | H1-2014: 61
Forward-Looking Trends
JLL | Montréal | Capital Markets Investment Insights | H1-2015 | Page 26
Forward-Looking Trends2015presentsanexcitingandpromisingfutureforMontréal,as themarket ispoisedforsignificantpositiveeconomicgrowthandthecity investsinsomeof the largest infrastructureandconstructionprojects inrecentdecades.Amongst theflurryofconstruction,Montréal’sdowntowncore isexperiencingasignificantoverhaulprimarily fromthemajor residential/office/retaildevelopmentscurrentlyunderwaynextdoor to theBellCentre.Theinfluxofpeopletothesedevelopmentswillcreatedemandforretailserviceswhichwillattracturbangrocerystores,pharmaciesandarangeofotherprofessionalservicesintheimmediatearea.Theretailmarketasawholeisexperiencingmanyofthesametrendsastherestofthecountry,withseveralbigboxretailersstillstrugglingtofindanicheamongstCanadianconsumers.However,Montréal’sSainteCatherineStreetwillundergoamajortransformationinthecomingyearsandhasalreadystartedattractinghigh-endretailerscommonlyfoundamongotherCanadianandAmericancities.OthersignificantinvestmentswillalsoplayamajorroleinMontréal’sgrowth,namelythecombined$4.0billiondollarconstructionoftheMcGillHealthCentre(MUHC)andtheCentrehospitalierdel’UniversitédeMontreal(CHUM),increasingtraffictotheareaandbolsteringemploymentinthehealthcareandtechnologyrelatedindustries.Alongwithanewlydevelopedskyline,Montréal’seconomyisexpectedtoseenoticeableimprovementoverthenext12to24months.GDPisexpectedtogrowbyapproximately1.8percentbytheendof2015,postingafouryearhighgrowthrateandforecastedtogrowanadditional2.0percentin2016.Theincreaseinthemanufacturingsectorisalreadyshowingpositiveresultsintheemploymentsectorandwill leadtoevenmorejobsonthemarketwhichhasalreadyseena50,000net increasein jobs inthefirst fourmonthsof2015.Realmerchandiseexportsareup10percentwhencomparedtothesametimelastyearandisexpectedtoremainoneofQuébec’skeydriversofgrowthin 2015.
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