Working on behalf of its Prime Canadian Property Fund and Sun Life, Bentall Kennedy has acquired 1250 René-Lévesque in Montreal. The sellers were Oxford Properties Group and the Public Sector Pension Investment Board. The latter is one of the building’s anchor tenants, and Oxford is itself the CRE unit of the Ontario Municipal Employees Retirement System. The 47-story trophy office tower changed hands for about $450 million, according to La Presse.
The landmark building includes more than 1 million square feet of office space, almost 30,000 square feet of retail space and 900 below-grade parking spaces. Kohn Pedersen Fox Associates designed the property, which came online in 1992 in the Ville-Marie borough of downtown Montreal and originally served as IBM Canada and Marathon Realty’s headquarters.
The acquisition reportedly aligns with Bentall Kennedy’s emphasis on sustainable investing. The building is LEED Gold and a BOMA Best Platinum property. It also has a Walk Score of 99 and is connected to Montreal’s underground path system, subway and train networks.
A sturdy, active downtown
Class A office space in downtown Montreal enjoys an average vacancy of 9.1 percent, the lowest in the city center since the first quarter of 2014, according to a spring 2019 report from Avison Young. On the other hand, 2.2 million of the total 3.1 million square feet of office space under construction in metro Montreal is downtown. Still, annual office space absorption in greater Montreal has been on an upward trend since 2015. The estimated absorption for 2019 is about 2.4 million square feet.
Class A office buildings in downtown Montreal currently trade at an average cap rate of 5.0 percent and an estimated average price of about $332 per square foot, also per Avison Young.
Last summer, in a transaction indicative of the diversity of Bentall Kennedy’s acquisitions, the company’s U.S. Core Fund bought a 138,900-square-foot shopping center, Kearny Square, in Kearny, N.J.