McGill College office space experiencing a revival

When 1981 McGill College was sold two years ago, the new owners were purchasing an office building that would soon be almost a third empty.

At the time, a major tenant, the law firm Ogilvy Renault, which occupied about 177,000 square feet out of 630,000 square feet of leasable space, was moving to Place Ville Marie.

"It’s a risk that we took," said Martin Rousseau, leasing director for the new owner, Industrial Alliance Insurance and Financial Services Inc. "But now it’s going well, we’re very happy."

After hitting a vacancy rate of more than 11 per cent and losing some major tenants over the last decade Рincluding CGI Inc., Bell Canada, and the Caisse de d̩p̫t et placement du Qu̩bec Рthe office buildings on McGill College Ave. appear to be going through a revival, real estate brokers say.

In recent months, landlords have landed some big name tenants. In 2012, tax and risk management consultancy firm RSM Richter is to move its Montreal offices from Alexis Nihon in Westmount to 1981 McGill College – a coup for Industrial.

Last week, Polaris Realty announced the arrival of the Fédération des Caisses Desjardins du Québec to 1253 McGill College.

And over the summer, Astral Media moved from Ste. Catherine St. downtown to its new offices on McGill College.

"It’s been good news for McGill College," said Luciano D’Iorio, president of Terramont Real Estate Services Inc. "There’s been a lot of musical chairs."

Brokers weren’t always so optimistic about the bustling downtown street. With McGill College’s vacancy rate hitting 11.3 per cent in 2002, the fear was that other tenants would want to relocate near the Caisse’s new headquarters at the Quartier International besides Square Victoria.

"Then the story was doom and gloom," said D’Iorio, who’s writing a piece on the street’s revival for the real estate trade publication Espace Magazine. "There was the fear that tenants wouldn’t want to be on McGill College."

In the third quarter, the Montreal market for Class A office space – as in most of the country – showed an improvement in vacancy rates, an October report by Cannacord Genuity says. In Montreal, the vacancy rates for Class A office buildings are now under the equilibrium point of 10 per cent level, D’Iorio says.

But rents for Class A buildings dropped slightly in the third quarter compared to the second quarter, said the Cannacord report, citing data from CB Richard Ellis.

Rousseau of Industrial says he’s optimistic despite still having the following three blocks of space left to rent: 35,000 square feet, 24,000 square feet and 5,000 square feet.

"Historically it’s an attractive address," he said of McGill College.