Montreal Lab Market Report 2023

‒    Over the past 30 years, Research & Development (R&D) spaces have tended to cluster together in four primary hubs and one emerging hub in the Greater Montreal Area (GMA), unlike Good Manufacturing Practices (GMP) facilities, which are generally located in various industrial parks. CBRE is currently tracking over 5.6M sq. ft. of life sciences space, a combination of R&D space and GMP facilities, with a current availability rate of 6.5%.

‒    In the GMA, over 80% of existing tenants performing R&D activities occupy lab spaces of less than 50,000 sq. ft., as research activities allow for higher employee density when compared to GMP facilities, which range from 40,000 sq. ft. to 90,000 sq. ft.

‒    Lab demand is composed of over 620,000 sq. ft. of R&D requirements and over 650,000 sq. ft. of GMP requirements. Target occupancy timeframes for R&D labs range from 12 to 24 months compared to 24 to 36 months for GMP facilities.

‒    The largest proportion of tenants seek space within established lab hubs in the West Island and Laval, as well as in the emerging Downtown hub. These areas are currently preferred due to the proximity to research institutes, workforce, public transit, and the presence of lab landlords/developers.

‒    Montreal’s life sciences ecosystem stands out from that of other major North American cities as the most affordable market in terms of real estate costs and labour. Lab net rental rates average $39.50 per square foot per annum.

‒    Currently, flex office and light industrial buildings with suitable base building characteristics present the most cost-effective conversion opportunities for developers, who have gained confidence in Montreal's life sciences market. There is currently one new project adjacent to downtown of 180,000 sq. ft., and numerous conversion projects in the suburbs, representing over 733,000 sq. ft. all of which are targeting
R&D occupiers, as GMP requirements are generally accommodated in traditional industrial buildings.

‒    These lab projects will meet the R&D occupier needs in the short term, but with growing demand, a recovery of the life sciences market and future stabilization of economic conditions, more high-quality lab space will be required.