Mon­treal’s build­ing boom mo­ment

Strong econ­omy, no for­eign tax help lure bil­lions of dol­lars for new con­dos, of­fices

Montreal Gazette - - FRONT PAGE - ROSS MAROWITS

Cranes crowd the Mon­treal sky­line th­ese days as a strong econ­omy and po­lit­i­cal sta­bil­ity are fu­elling a con­struc­tion frenzy through­out the down­town core and beyond. Although tame by Toronto and Vancouver stan­dards, de­vel­op­ers in Canada’s sec­ond-largest city are in­vest­ing bil­lions of dol­lars in new con­do­minium and of­fice com­plexes, along with retrofitting older build­ings. “Since 1976, this is one of the great­est times,” Mayor De­nis Coderre said, re­fer­ring to the year when the elec­tion of the sep­a­ratist Parti Que­be­cois prompted an ex­o­dus of res­i­dents and busi­nesses. “There is right now 150 cranes rep­re­sent­ing $25 bil­lion of in­vest­ment in Mon­treal,” he said at the of­fi­cial launch of the sec­ond phase of the YUL twin tower and town­house project that is spon­sored by Chi­nese in­vestors. Project de­vel­oper Kheng Ly of Brivia Group Real Es­tate, who has part­nered with China’s Tianco Group, said rel­a­tively low condo prices and the lack of a for­eign buy­ers tax make Mon­treal an at­trac­tive place to in­vest. Ly, who ar­rived in Canada 29 years ago, said the down­town land­scape has changed sig­nif­i­cantly in the past five years. The re­cent ad­di­tion of di­rect flights be­tween China and Mon­treal have at­tracted Asian in­vestors who com­prise 35 to 40 per cent of condo own­ers at the project’s first phase, he said. Fur­ther ev­i­dence of the city’s con­struc­tion boom can be seen along a short stretch to the Bell Cen­tre where tow­ers sur­round­ing the home of the Habs are a sym­bol of the change that has been sweep­ing over the city. A 55-storey glass build­ing that will carry the famed Mon­treal Cana­di­ens red and white logo has been launched af­ter two pre­vi­ous tow­ers fea­tur­ing spe­cial ac­cess to the hockey com­plex were quickly sold out. The project is part of a large de­vel­op­ment of res­i­den­tial and of­fice build­ings planned by Cadil­lac Fairview and its part­ner Can­derel for Quad Wind­sor, an area near the his­toric rail sta­tion. The as­so­ci­a­tion with one of sports’ most sto­ried fran­chises is mod­elled af­ter Toronto’s Maple Leaf Square and sim­i­lar ap­proaches in Los An­ge­les, Dal­las and Ed­mon­ton. Mon­treal trails Toronto and Vancouver in con­do­minium de­vel­op­ments partly be­cause of the city’s his­toric pref­er­ence for rentals.

“So there’s a bit of catch up,” said Brian Salpeter, Cadil­lac Fairview se­nior vice-pres­i­dent of de­vel­op­ment, Eastern Canada.

Low in­ter­est rates, higher dis­pos­able in­come and mu­nic­i­pal in­cen­tives have made home own­er­ship more af­ford­able and fu­elled pur­chases, said Raphael Fis­chler, a pro­fes­sor at the McGill Univer­sity School of Ur­ban Plan­ning.

Since many of the large res­i­den­tial projects are built on empty lots or in old in­dus­trial lo­ca­tions, there is lit­tle im­me­di­ate im­pact on af­ford­able hous­ing. How­ever, he said it has caused an up­ward pres­sure on rents.

Daniel Peritz of Can­derel said out­siders are fi­nally see­ing the city’s po­ten­tial.

“It’s very nice be­cause for so many years we didn’t have that sit­u­a­tion. We have it now and the rest of the coun­try is rec­og­niz­ing it,” he said.

Royal LePage real­tor Amy As­saad said that the last cou­ple of years have been par­tic­u­larly strong.

De­mand is hottest for con­dos priced be­tween $300,000 and $400,000 along with high-end units, she said.

As­saad said she’s see­ing more for­eign buy­ers from Europe, China and the Mid­dle East. In ad­di­tion to good pric­ing, they are at­tracted to the city’s great univer­sity sys­tem, strong tran­sit net­work and a sense of se­cu­rity.

“Ev­ery­thing is on our side right now,” she said in an in­ter­view.

How­ever, Prof. Fis­chler said there is a con­cern that too many con­dos are be­ing built, in­creas­ing the in­ven­tory of un­sold units.

“Peo­ple en­ter­ing the mar­ket to build now have to be care­ful,” he said.

In ad­di­tion to down­town, other thriv­ing ar­eas are Griffin­town in the city’s old in­dus­trial area near the La­chine Canal and pock­ets of neigh­bour­hoods that are un­der­go­ing gen­tri­fi­ca­tion.

For de­vel­op­ers like Que­bec pen­sion fund man­ager Ivan­hoe Cam­bridge’s real es­tate sub­sidiary, the cur­rent en­vi­ron­ment is the strong­est it has seen in a quar­ter cen­tury.

Of­fice va­cancy rates have been de­clin­ing as spaces are filled at the high­est level in five years and net rental prices are on an up­swing, said Bernard Poliquin, se­nior vi­cepres­i­dent of­fice in Que­bec.

Ivan­hoe is of­fi­cially open­ing its 27-floor down­town of­fice tower next month, which will house Man­ulife and Ernst & Young.

“Oth­ers like me who have been in the mar­ket for 20 to 30 years are say­ing the same thing: We haven’t lived this in our ca­reers.”

Oth­ers like me who have been in the mar­ket for 20 to 30 years are say­ing the same thing: We haven’t lived this in our ca­reers.

PAUL CHIASSON/THE CANA­DIAN PRESS

Mon­treal is abuzz with con­struc­tion projects such as the Tour des Cana­di­ens con­dos in the city cen­tre, pic­tured. Although Canada’s sec­ond-largest city trails Toronto and Vancouver in de­vel­op­ment, many out­siders in­clud­ing for­eign in­vestors are fi­nally rec­og­niz­ing the city’s po­ten­tial.

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