JLL recently named Dominic Bonin senior vice president of its Montreal industrial group. Green Street News sat down with Bonin, who offered insights into the current state and future prospects of industrial property investment in Montreal.
In terms of investment sales activity, what trends are you observing in the industrial real estate market in Montreal, and how are they shaping your strategic approach at JLL? Are there any factors that make Montreal unique compared with the rest of Canada?
Montreal has been witnessing an increased interest from institutional investors focusing on the industrial real estate sector in recent years. There has been a significant increase in investment sales activity, notably due to the strong demand caused by the growth of e-commerce and supply chain changes.
The strategic approach at JLL is thereby aimed at tapping into this growing trend of institutional investments via local partnerships. Montreal’s unique market, language, culture and location offer opportunities for enhancing portfolio diversification compared with the rest of Canada.
Who are the main investors in industrial property in Montreal today? Has that changed in recent years?
Montreal is still a very unique market in which institutional investors were not very active here, but this is changing in the last few years. But they are doing it through partnerships with local players who have boots on the ground and can support their program.
As a result, we are seeing a lot of joint ventures on major projects, and there is a lot of appetite from institutional investors to get into the Montreal market the right way.
Could you discuss any emerging investment strategies or niches within industrial real estate that JLL sees as particularly promising for investors seeking diversification and attractive risk-adjusted returns?
As per JLL’s observations, emerging investment strategies within the industrial real estate in Montreal are focused primarily on development and redevelopment projects as well as small-bay (sub-10,000 sq ft) value-add income-producing properties. These sectors offer diversification and attractive risk-adjusted returns given the robust demand trends in Montreal’s industrial sector.
Which parts of Montreal are most attractive for industrial investment?
The industrial sprawl witnessed during the pandemic suggests regions such as the Saint-Hubert Airport area, areas closer to the Port of Montreal expansion and where the new battery plants will be located, were new submarkets that were previously overlooked. With demand cooling off in the large-box spaces, on-island is back to being the preference since this is where tenants prefer to be located.
As much as these regions were expected to benefit greatly during Covid, we can expect less demand and lower asking prices for assets located off-island.
What are your expectations for Montreal’s industrial market for the next 12 months?
Over the next 12 months, Montreal’s industrial market is expected to remain strong, considering the ongoing development boom and tenants right-sizing their operations. The coming months will possibly present arguments for a flight to quality with the completion of several development projects.
This could result in businesses capitalizing on new construction with higher clear heights, which can accommodate modern logistics needs better and create better value for tenants.
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