Older buildings are driving up Montreal industrial vacancy, says a new report from Avison Young.

A shortage of new centrally located supply has prompted a flight to quality, says the company in its second quarter Montreal industrial report.

“The average vacancy rate is inflated by the portion of the inventory that is aging and no longer suitable for today’s tenant needs,” says Avison Young in the report.

The region’s total industrial vacancy rate rose 50 basis points to 2.1% in the second quarter.

More than half of the region’s industrial inventory was built before 1980, and 17% came on line before 1960. As a result, the older segments have a higher combined vacancy of 3% versus 1.3% for buildings constructed in the 2000s and 2010s.

“While there are assets being repositioned in older neighborhoods, this is unlikely to stop the exodus to newer buildings in the outskirts of the city,” says Avison Young.