The Greater Montreal office real estate sector’s flight to quality is accelerating, says a new Avison Young report.

Although overall high availability rates have challenged the market, tenants are showing a clear preference for newer buildings.

So far this year, buildings constructed in the past 23 years have witnessed positive overall absorption, while older buildings have been losing occupancy, states the report. Absorption is also more “prominent” among newer class A buildings than class B.

“Going forward, property owners and managers will need to implement concrete plans for these older properties in order to keep them at a competitive level with the rest of the office market,” says Avison Young. “Some may decide to dedicate these sums to convert their office assets to more profitable use.”

In downtown Montreal, conversion projects that are currently being assessed could remove nearly one million square feet of excess office inventory from the market. Barring the delivery of new supply, the potential adaptive reuse projects could reduce In the absence of new supply, the conversions could reduce downtown vacancy by 1.0% to 1.5%, says Avison Young.