Industrial rents that bleed SMEs

Industrial rents that bleed SMEs

Montreal’s industrial market is seeing the highest rent increases in the country. The arrival of Americans in the market has something to do with it, industry observers believe. SMEs, who see their rent double, or even triple, at the renewal of their lease are paying the price.

Posted at 6:00 am

Andre Dubuc

Andre Dubuc

“I have a tenant who occupies 25,000 square feet [2300 mètres carrés] à Longueuil d’un gros propriétaire : son loyer est passé de 6.50 $ a 19 $ le pied carré net », dit par exemple Paul-Éric Poitras, principal associate of the NAI Terramont Commercial agency, specialist in the industrial market of the South shore.

“There are fewer free premises, explains the broker, and the owners are taking advantage to raise rents. After that, companies no longer know where to “launch” because there really isn’t much availability. »

“I see it difficult for SMEs today,” he continues. I have clients who have told me, “The rent increase is taking all my profits.” I have many clients in Longueuil and Boucherville looking towards Saint-Césaire and beyond. They tell me: “I no longer have the means or my profits are gone.” »

The tenant whose rent has gone from $6.50 to $19 per square foot in Longueuil does not want to testify publicly so as not to sour his relationship with the landlord.

This case is far from unique. “In our business resources department, we have received cases of business owners who have complained about a significant increase in their rent during renovations,” says François Vincent, vice president for Quebec of the Canadian Federation of Independent Business, dedicated to defending the interests of SMEs. .

Real estate is the second largest expense item for businesses after salaries.

I have seen businesses in the Quebec region that have been evicted or taken hostage with rents that doubled at renewal. [du bail].

Louis Veilleux, owner of Métal Bernard in Saint-Lambert-de-Lauzon, near Lévis

“Today, with what we see in rents, we are happy that we have taken the prudent approach of owning our own buildings, he celebrates. Our occupancy costs are controlled by ourselves. »

The runner Paul-Éric Poitras makes his mea culpa. “For years, I have advised my clients to keep their cash, invest in their business and pay their rent. “When the roof leaks, you call the owner.” Today you can’t kick out SMEs that own their premises, while it happens to others. As a tenant representative, we pull our hair out. »

Rents that rise 15% in three months

Industrial rents have increased by 90% since the start of the pandemic, 62% in the last year alone, which places Montreal “among the fastest growing markets in the country”, underlines the CBRE agency in its latest report. study of the industrial market in the Montreal region, published in July.

As of mid-2019, the median net rent requested was $6.12 per square foot. At the end of June 2022, it stood at $13.40.

“Lenders have revised their prices; Average net income continued to rise to new heights in Greater Montreal. [L’augmentation a été de 15 % au deuxième trimestre 2022 par rapport au prix moyen demandé au premier trimestre 2022.] Rents show no signs of slowing down. While the owners of the metropolises reassess the sale price of their available products on a daily basis, ”writes CBRE in its report.


With the acquisition of the industrial portfolio of Quebec real estate company Comarar on March 1, 2022, Blackstone has become a leader among industrial warehouse owners in the province with 190 buildings with a total area of ​​1.4 million square meters .

From Quebec Comar to American Blackstone

At least three industry players have pointed to the arrival of the American Blackstone as a factor that explains in part the acceleration of the increase in industrial rents in 2022, which distinguishes Quebec from the rest of the country.

By acquiring the industrial portfolio of the Quebec real estate company Comar el 1Ahem March 2022, Blackstone has become a leader among industrial property owners in the province with 190 buildings totaling 1.4 million square meters (15.3 million square feet).

The market environment was already favoring the owners, Blackstone, through Pure Industrial, was able to quickly implement its methods imported from the United States.

It is true that the buyers of the industrial properties in Comar, when they became owners, immediately began to push for rents more strongly than other owners in Quebec. It is an American company that entered the market to make money. The other owners followed him.

Ian Quint, president of Brasswater, a real estate company that has just acquired 100 million in the Saint-Laurent industrial estate

“Blackstone, of course, have their way of doing things,” replies one broker when asked to describe the American’s influence on the market. He does not want to be named so as not to damage his relationship with the market leader.

These practices include automatic annual rent increases and shorter leases in order to adjust rents to market level as quickly as possible.

“Before, explains this same broker, the leases were for 10 years with a fixed rent of $5.50 per net square foot. [avant frais et taxes] for five years, then the rent increased to $6.50 beginning in the sixth year. Today is an annual increase of the highest between 2-3% and the CPI [indice des prix à la consommation]. »

“Pure [gestionnaire de Blackstone] created something that other owners were quick to replicate, said another broker, who agreed to speak on condition of anonymity. The context is favorable for Pure to implement its methods. Fits all other owners of course. »

pure strikes back

When asked to comment on these claims, Pure denied them. According to her, rents are going up due to market conditions that favor landlords. Also, controlling only 5% of the total inventory, Pure is not powerful enough to influence the market, she argues.

“Pure is proud to have honored all of the Comar leases it has taken on and we have hired over 60 people from Comar to manage these assets,” David Owen, chief operating officer of Pure Industrial, said in a written statement. Since the Comar transaction, Pure has opened two offices located in Montreal and Quebec City, as well as hiring additional staff, for a total of 75 employees in the province. Across Canada, Pure employs approximately 185 people. »

“Building long-term relationships based on highly responsive and personalized service for our tenants is a key priority for Pure Industrial,” he continues.

In 2018, Pure Industrial REIT was privatized by Blackstone and Caisse de depot etplacement du Québec’s real estate subsidiary, Ivanhoé Cambridge, and became Pure Industrial.

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