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15 Jan

Ericsson sells Vaudreuil data centre to GI Partners

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Posted by: James Moysey

GI Partners, a private investment firm, which owns and operates a network of data centres, said on Tuesday it has purchased the facility from Ericsson

Ericsson’s $1.3-billion data centre in Vaudreuil-Dorion, which opened in December 2016 and was scheduled to close this year, has been acquired.

GI Partners, a private investment firm that owns and operates a network of data centres, said on Tuesday that it has purchased the facility from Ericsson.

Ericsson had planned to close the facility, an announcement made less than a year after it opened, as a cost-cutting measure. The company, which has reported four consecutive quarters of losses, expected to save $46 million a year by consolidation of operations at two other data centres.

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11 Jan

Condo and rental apartment starts hit highest level in 30 years: CMHC

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Posted by: James Moysey

Housing starts for apartments — both condominiums and purpose-built rental — in the Montreal region rose to their highest level since the late 1980s in 2017, according to the Canadian Mortgage and Housing Corporation.

In total, there were 24,756 housing starts in the Montreal census metropolitan area in 2017, the highest level since 2005 and an increase of almost 40 per cent from the previous year, according to the CMHC.

Of that, 19,400 were rental apartments or condos, up from 15,335 in 2016.

“It’s a sign that housing demand is pretty strong in the CMA right now, and part of the reason why it’s so strong is the strong job market,” said Genevieve Lapointe, the CMHC’s Montreal market analyst.

Unemployment in the Montreal region is at the lowest level on record.

The strong job market is increasing incomes in the region, Lapointe said.

That has people buying properties. The number of unoccupied new condos and the number of resale condos on the market are both down.

Both of those factors are encouraging developers to build new condominiums, Lapointe said.

The CMHC data comes one day after the Greater Montreal Real Estate Board reported the highest number of December condo sales on record.

“We already have seen an increase in housing starts in 2017 for condos in the Montreal area,” said Paul Cardinal, the manager of market analysis for the Quebec Federation of Real Estate Boards. “Developers are quite responsive to market signals. They saw that there was more demand for condominiums.”

Of the new apartment construction, about one-third were condos, while the rest were purpose-built rental apartments, according to the CMHC.

That’s unusual, Lapointe said.

“The last time we’ve seen more rental contraction than condominiums was at the beginning of the 1990s,” she said.

The new construction comes at the same time as the rental vacancy rate has declined.

“It was at 3.9 (per cent) in 2016 and it’s now at 2.8,” Lapointe said. “It’s quite significant because the vacancy rate decreased in a context where a lot of new units were added to the rental market, so that means that rental demand increased at a faster pace than supply.”

Lapointe said it appears the growing demand for rentals is related to an increase in international migration to Quebec, particularly the arrival of more non-permanent residents.

As well, Lapointe said, the 2016 census showed that young people are increasingly renting.

Between 2001 and 2011, there was increase in home ownership among Montreal-area residents age 15 to 24. That’s now reversed.

Lapointe said it’s not yet clear why this is happening, though it may have to do with the increase in newly-built rental units, which has given renters more options, and rising property prices.

jserebrin@postmedia.com

3 Jan

Cominar to sell non-core market assets to Slate for $1.14B

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Posted by: James Moysey

Cominar Real Estate Investment Trust (CUF.UN-T) will sell its entire non-core market portfolio, 97 properties valued at $1.14 billion, to Slate Asset Management in one of the largest commercial real estate transactions announced in Canada in 2017.

Cominar REIT is selling $1.14B in non-core market assets to Slate Asset Management. It also intends to sell up to $1.5B in core market properties in 2018.

Cominar REIT is selling $1.14B in non-core market assets to Slate Asset Management. It also intends to sell up to $1.5B in core market properties in 2018.

Citing a strong Canadian real estate market, and what a company release calls “meaningful interest for a number of properties”, the trust also announced it intends to review and sell up to $1.5 billion in assets from its core market holdings.

Cominar expects to finalize this core property review by mid Q1 2018 and to sell the properties by the end of 2018.

“This value-enhancing initiative will allow us to capitalize on our leadership position in our core markets. With this greater focused portfolio, Cominar will be better positioned to maximize the value of its assets,” said Sylvain Cossette, who is currently president and chief operating officer of Cominar, but will become CEO on January 1.

Cossette will be taking over the position from current CEO and chairman of the board Michel Dalliare, who announced his intention to step aside as CEO in November.

Cominar had announced on Aug. 22 its plan to divest all non-core market assets as part of a debt reduction plan, as well as its intention to focus on its core markets in the Province of Quebec and in neighbouring Ottawa.

* Background: Cominar REIT to sell all non-core real estate

The Monday morning release calls the transaction with Slate a “definitive agreement.” Closing of the transaction, however, remains subject to customary closing conditions including regulatory approvals, and is expected by the end of March 2018.

The portfolio is being purchased by Slate’s Canadian Real Estate Opportunity Fund I. The fund acquires “commercial real estate through complex portfolio acquisitions, cyclical investing and/or asset repositioning opportunities,” according to Slate.

The non-core market portfolio is composed of 97 properties totalling 6.2 million square feet located in the Greater Toronto Area, the Atlantic provinces and in Western Canada.

The portfolio includes 24 properties in the Greater Toronto area, comprising almost 2.5 million square feet. In the Atlantic Provinces, there are 59 properties covering 2.6 million square feet and in the Western Canada portfolio there are 14 properties of 1.1 million square feet.

The office portion of the portfolio is almost three million square feet spread over 37 properties. There are also 37 industrial / mixed use properties totalling 1.7 million square feet and 23 retail sites of 1.5 million square feet.

Individual properties in the portfolios included the Scotia Centre office tower and retail podium (606,000 square feet) in Calgary, a cluster of 12 industrial buildings (495,000 square feet) in Mississauga, Ont., and the Dixie Outlet Mall (406,000 square feet) also in Mississauga.

The sale portfolio is comprised of both income-producing properties (approximately 90 per cent of the assets), with the remainder being land and properties under development.

* More insight: Are there buyers for Cominar REIT portfolio?

The overall capitalization rate of the income-producing properties to be sold is estimated at 6.2 per cent, including 5.3 per cent for the Greater Toronto Area.

Following the transaction, Cominar will not own any properties in Western Canada, the Greater Toronto Area or the Atlantic Provinces.

Reduce Cominar’s debt by $875M

The majority of the proceeds from the sale will be used to reduce Cominar’s indebtedness by approximately $875 million — the entire amount currently outstanding on its credit facility.

The aggregate gross sales price of the Greater Toronto Area and the Atlantic provinces’ income-producing properties is in line with their aggregate book value. Cominar says in the release that, given the continued challenges in the Calgary market, it is writing down the Western Canadian assets by $275 million.

“We are very pleased with the successful execution of the disposition plan and the sale of our entire non-core market portfolio in one transaction. This transaction will enable Cominar to capitalize on its core markets while also strengthening its balance sheet,” said Michel Dallaire, chairman of the board of trustees and chief executive officer of Cominar, in the release.

Slate will assume approximately $107.1 million of mortgage debt and Cominar will repay $164.5 million of mortgage debt.

About Cominar, Slate

Cominar is the third largest diversified REIT in Canada and (as of Dec. 18) remains the largest commercial property owner in the Province of Quebec. The REIT owns 524 properties in three different market segments; office, retail, and industrial and mixed-use. Cominar’s portfolio totals 44.1 million square feet across Quebec, Ontario, the Atlantic Provinces and Western Canada. Cominar’s objectives are to pay growing cash distributions to unitholders and to maximize unitholder value through proactive management.

Slate has more than $4.5 billion in assets under management. Slate was formed in 2005 and has since expanded from Canada across North America and Europe with exposures in multiple asset classes. It currently employs more than 60 professionals, and works with multiple capital sources from institutional and pension fund investment partners, to private equity, family offices and public markets.

 

STAY TUNED: RENX will update this breaking story with more information as details become available.

29 Dec

Réseau Sélection retirement developments win global awards

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Posted by: James Moysey


Two retirement homes by Quebec developer Réseau Sélection have been named the best in seniors housing in a global awards program.

The Réseau Sélection Signature Vaudreuil is one of two retirement homes by the Quebec-based firm to win global awards for seniors residences.

The Réseau Sélection Vaudreuil Signature is one of two new retirement developments by the Quebec-based firm to win global awards for seniors residences. (Rendering courtesy Réseau Sélection)

The company won the Most Outstanding Senior Rental Housing of 2017 award for the recently completed Sélection Vaudreuil Signature at the 2017 edition of The Globals – Over 50s Housing Healthcare event in November in London.

It also won Most Outstanding Vertical Retirement Living Project Award for its Sélection Panorama Prestigecomplex in Laval, now under construction. Slated for completion in October 2018, the 30-storey building will be the tallest seniors housing project in Canada.

“Surpassed the expectations”

“We’ve surpassed the expectations of people when they think of what a retirement home could be,” says Patrick Préville, director of public relations and communications at Réseau Sélection. The awards will be used for marketing purposes for the two properties, he says.

Réseau Sélection has developed and built nearly 40 retirement complexes in Quebec with about 10,000 units during the last 30 years.

Préville says the company’s first Canadian seniors housing project outside Quebec should be announced in 2018 and will be located in Ontario.

Founded in 1998, the seniors housing awards were chosen by an independent panel of 20 journalists who cover the health-care, residential services, medical tourism and technology sectors. Seniors housing developers from 15 countries participated in the event.

Selection Vaudreuil 40 per cent leased

Esmonde Crawley, one of the awards show judges and an expert in homes for seniors, noted in a statement the awards signify Canadian retirement homes “will clearly be attracting attention during the next few years.”

“It’s right on our expectations,” Préville says, noting leasing for Réseau Sélection rental properties typically begins only a few months before construction ends.

Units range from 500 to 1,000 square feet and rents range from $1,300 to $2,300 monthly.

The 12-storey building is the tallest in the area and offers views as far away as Mount Royal. It’s close to a number of stores and is designated as a transit-oriented development (TOD) as the Dorion train station, which serves downtown Montreal, is only a few minutes walk away.

Sélection Vaudreuil is geared to active retirees with renters’ average age to date about 75, “much lower than what you find elsewhere.”

Multi-generational development

It marks the first phase of a planned three-phase, multi-generational project that will have 350 units. The second phase will be geared to families and the third to care.

“You can spend your entire life at Sélection Vaudreuil,” Préville notes.

The thinking is that retirement is a stage of life in which people can continue to grow, according to Réal Bouclin, Réseau Sélection’s president and CEO. “Today, different generations want to mingle with each other.”

Sélection Vaudreuil puts the accent on active living, Préville says. There is plenty of natural lighting, a two-storey lobby that serves as the base for an “elegant” common area, and a courtyard in the rear “that makes you feel like relaxing.”

The complex includes what Réseau Sélection calls its “healthyID” lifestyle program that focuses on prevention and awareness to encourage seniors to adopt healthy daily habits. Professionals ranging from physiotherapists to kinesiologists are on hand, as well as a full-time nurse, part-time doctor and massage therapist. There is also an exercise room and a pool “you’ve got to see to believe,” Préville says.

Panorama under construction

Now half-completed, the $100-million Sélection Panorama in the Sainte-Dorothée neighbourhood of Laval is Réseau Sélection’s flagship project.

It will have 286 units comprising 48 condos (from $275,000 to about $650,000), 206 rental apartments (from $1,245 to $4,000 monthly) and 32 care units designed for couples in which one partner has health problems and needs daily care. (For more information, see Réseau Sélection building Canada’s tallest seniors tower)

The project is attracting former Montrealers who live abroad but want to return home in retirement, Préville says.

14 Dec

Renters rule in Montreal, spending an average $835 monthly on housing

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Posted by: James Moysey

Montreal is for renters.

Almost two-thirds of people who live in the city rent rather than own their homes, spending an average of $835 monthly on housing, including rent, electricity and heat, according to a new analysis of 2016 census data collected by Statistics Canada.

Housing costs are highest in Outremont — $1,269. But Westmount homeowners spend the most on housing: $2,304, including mortgage, real-estate taxes, condo fees, electricity and heating.

Here are more statistics from the analysis by the city of Montreal’s economic-development office:

Monthly housing costs

$835: Average spending on housing, including rent, electricity and heat, in the city of Montreal. The average apartment in Montreal has 4.5 rooms, which normally means two bedrooms, a kitchen, a living room and a bathroom.

8: Boroughs in Montreal where average housing costs are lower than $800.

$742: Average housing cost in Villeray–Saint-Michel–Parc-Extension borough. Lowest in the city.

4: Boroughs where average spending on housing is more than $900.

$1,269: Average housing cost in Outremont borough. Highest in city.

$1,126: Average housing cost in demerged suburbs.

$1,859: Average housing spending in Baie-d’Urfé. Highest on Montreal Island.

$1,366: Average spending on housing by homeowners on Montreal Island, including mortgage, real-estate taxes, condo fees, electricity and heating.

$2,304: Average spending on housing by homeowners in Westmount. Highest on Montreal Island.

Tenants vs. owners

63%: Montreal households that rent rather than own their homes.

73%: Côte-des-Neiges–Notre-Dame-de-Grâce households that are renters. Highest percentage in the city.

32%: Households in demerged suburbs that rent rather than own homes.

6%: Kirkland households that rent. Lowest percentage on Montreal Island.

Spending on housing

37%: Among renting households, percentage that spends more than 30 per cent of income on housing on Montreal Island.

21%: Among home-owning households in the city of Montreal, percentage who spend more than 30 per cent of income on housing. For Montreal Island as a whole, the percentage is slightly lower — 20 per cent spend more than 30 per cent on housing.

7 Dec

No shortage of tenants for new industrial space

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Posted by: James Moysey

Just east of Montreal’s Pierre Elliott Trudeau International Airport, real estate company Bentall Kennedy is building its first speculative industrial project in the city in years. The 216,000-square-foot facility isn’t scheduled to open until next summer, but with Montreal’s industrial market undersupplied in the midst of an economic boom, potential tenants are already lining up to occupy the space.

“We’ve had a lot of traction on it,” said Roberto Giglio, vice-president of leasing for Bentall Kennedy’s Quebec division. “This is one of these buildings that we feel is going to be leased even before we complete it.”

Speculative building traditionally plays a far smaller part in Montreal’s industrial real estate market than in cities such as Toronto, Vancouver or Calgary. But with the third quarter of 2017 seeing 15-year-low availability rates, and demand booming from the logistics and aerospace sectors, Montreal landlords are beginning to develop their remaining parcels of land on spec – “a trend unseen in many years,” according to CBRE Group Inc.’s third-quarter research.

“It’s clearly a landlord’s market,” said Avi Krispine, managing director for CBRE’s Quebec operations. Companies “used to be able to take four, five, six months to decide whether they’re going to go ahead with their project or not, in terms of leasing. Today … good luck if you have a couple of weeks.”

Across the country, industrial continues to be one of the best performing commercial real-estate asset classes. The national average net asking rental rate was up 7.2 per cent year-over-year in the third quarter, and availability across the county reached a 16-year low of 4.3 per cent.

 Toronto and Vancouver continue to lead the country in terms of low vacancy, at 2.3 and 2.6 per cent, respectively. But Montreal’s market is tightening, with almost 2.2 million square feet of absorption in the third quarter alone – more than Vancouver and almost as much as Toronto.

In fact, Montreal and Calgary saw almost half of Canada’s net absorption of industrial real estate in the third quarter.

In Montreal, this was led by large aerospace and logistics leases by companies such as Avior Integrated Products Inc. and Syncreon International Group. Smaller companies are likewise demanding space, as business confidence in the province’s economy continues to soar.

At the same time, available product, especially on crowded Montreal Island, isn’t keeping pace with demand.

“On the whole island of Montreal, there are five spaces of 100,000 feet or more,” said Mr. Giglio. “The vacancy rate for buildings over 24-foot [clearance height] is something like 2.5 per cent, and that’s in the entire Greater Montreal.”

Adding to this is a decline in older industrial stock.

With Montreal leading North America in terms of growth in technology jobs – 18 per cent over the past year, according to CBRE – tech companies are transforming high-ceilinged, exposed-brick industrial space into offices, said Mr. Krispine.

A different scenario is playing out in Calgary, the other standout performer in the third quarter (beyond the usual suspects, Vancouver and Toronto).

At 8.5 per cent, industrial vacancy remains high in Calgary, three years after the oil price drop sent Alberta’s economy reeling. But things are beginning to look up, with nearly 1.2 million feet of space being absorbed in the third quarter, and speculative development is likewise returning to the market.

Bentall Kennedy, in partnership with Highfield Development, is developing Calgary’s first industrial building on spec since 2015. The 420,000-square-foot building, with 36-foot clearance height, will open next summer in Balzac, an area just outside Calgary that’s home to a number of major distribution centres for companies such as Wal-Mart and Sobeys. Amazon also recently announced a 600,000-square-foot fulfillment centre in the area.

“The fact that we were able to sell such a substantial, in some respects risky, development really speaks to what the insiders in this market already know, which is we’re going to be out of supply very quickly,” said Iain Ferguson, executive vice-president for industrial and logistics at CBRE Canada.

 Demand for Calgary’s industrial space is being driven partly by a return of capital expenditure to the Alberta oil patch and associated investment in manufacturing. More than this, however, is a continuing effort by companies to consolidate their Western Canadian distribution networks, treating Calgary as a kind of “inland port,” said Mr. Ferguson.

With Amazon and other e-commerce giants changing consumer expectations, companies are having to raise their logistics games. That means increased demand for large, high-tech industrial buildings in transportation hubs like Calgary.

“It’s going to be very expensive for everybody to chase Amazon down the rabbit hole,” said Mr. Ferguson.

“In a lot of cases, [competitors will need] bigger warehouses, more investment in SAP systems and infrastructure and material handling. It’s definitely a take-a-deep-breath moment for a lot of people in the market.”

See More

 

4 Dec

Réseau Sélection Strengthens its Presence in Greater Montréal Following the Acquisition of Three Retirement Homes

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Posted by: James Moysey

LAVAL, QCDec. 1, 2017 /CNW Telbec/ – Réseau Sélection announced today that is has acquired the Cherbourg I and Cherbourg II in Brossard and Le Graham in the Town of Mount Royal, three retirement homes previously owned by Prével Retraite and the Fonds immobilier de solidarité FTQ. This transaction brings the number of Réseau Sélection residences in operation or under construction to more than 40 and reinforces its presence in Greater Montréal.

“This transaction is important to us because it brings the number to more than 40 residences as we already are the leading player in Canada in the private sector. This being said, year after year, we maintain an excellent satisfaction rate of 95% from our clients. And we are very proud of it! As a living environment creator, our priority is the satisfaction and the well-being of our clients and our employees”, said Réal Bouclin, founding President and Chief Executive Officer of Réseau Sélection.

Réseau Sélection will welcome some 1,000 new residents who live in the 710 apartments in the three residences into its family as well as one hundred employees.

“Réseau Sélection has an excellent reputation for being focused on customer satisfaction. We believe that residents and employees in these three residences will continue to have a positive experience in their living and working environments” said Jonathan Sigler, Prével’s co-President. “The previous transaction we concluded with Cambridge in 2013 went well and gave us confidence for this current deal”, concluded Normand Bélanger, CEO of Fonds immobilier de solidarité FTQ.

“It is with great pleasure that I welcome our new colleagues and residents in the Réseau Sélection’s family”, said Réal Bouclin in conclusion.

Cherbourg I and II
The Cherbourg I and II, which are located on the banks of the majestic St. Lawrence River, offer an ideal and inspiring lifestyle for active retirees. The common areas – indoor pool, spa, sauna, exercise room, billiard room, cinema, library, dining room and bistro, outdoor gardens, walking trails and shuffle board – were designed to promote residents’ health and well-being. Residents also have access to a hair salon, convenience store, indoor parking and a pharmacy.

Le Graham
Le Graham, which is located in the renowned Town of Mount Royal, is a luxurious complex that has everything to enjoy, starting with a gourmet restaurant that food enthusiasts will love. Its proximity to local services enables Le Grahamresidents to remain active and enjoy their surroundings. Common areas and facilities include a large indoor pool, fitness center, health center, beauty salon, event room, café-bistro, living room with fireplace and library, outdoor terraces and a cinema.

Five-year plan 2015-2020
“With this acquisition, we are closing the loop with Prével which began when we acquired Le Cambridge in 2013,” said Richard Nadeau, Réseau Sélection’s Senior Vice-President and Chief Financial Officer, who led the transaction. “The addition of these three new retirement homes is a continuation of our $2 billion, five-year investment plan that we announced in 2015, for which we have already committed more than half of our commitment.”

About Réseau Sélection
Réseau Sélection has been developing and managing residential projects for over 30 years. A pioneer in the field of retirement communities, today Réseau Sélection is the leading private player in this sector in Canada. Its sense of innovation earned them to receive international recognition with two Global Awards (2017) for Sélection Vaudreuil and Sélection Panorama. The company has a unique vertically-integrated structure, which facilitates both geographical and product diversification. This is the inspiration behind the creation of REZ Real Estate, a division dedicated to multi-residential and multi-generational projects, and to the development of integrated living environments that respond to the diversity of today’s families. In addition to 41 retirement homes, already operating or under construction, the company has announced more than $500 million in investments for its REZ Real Estate division over the next three years. Réseau Sélection has close to 4,500 employees dedicated to serving its clients, 96% of whom would recommend Réseau Sélection to their friends and family.

For images: https://app.box.com/s/0q1xwy88l5nqhj7hg9ekk5j6oa8ydoym

SOURCE Réseau Sélection

For further information: France Gaignard, PING Communication, 514-616-7705

Related Links

http://www.reseau-selection.com/

13 Nov

Commercial real estate bull run to continue: Morassutti

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Posted by: James Moysey

Evan Duggan | Property Biz Canada | 2017-11-07

 

Canada’s bull run in commercial real estate shows no signs of abating despite ongoing threats to NAFTA and concerns over Canada’s overheated housing market, said CBRE’s executive vice-president at an annual market and economic update in Vancouver this week.

Paul Morassutti of CBRE.

Paul Morassutti is the executive vice-president of CBRE. (Image courtesy CBRE)

Paul Morassutti said commercial property investment and leasing in Canada “continues to defy predictions while grappling with an unprecedented level of change.”

He was speaking Wednesday at the introduction of the Vancouver Real Estate Strategy and Leasing Conference to a packed ballroom of industry stakeholders and observers.

“We are currently eight years into an incredible bull run for the commercial real estate market,” Morassutti said.

“After years of mediocrity, the Canadian economy outperformed all G7 nations in the first half of the year,” he said. “The Alberta economy rebounded sharply while growth in B.C., Ontario, Quebec and most other provinces remain solid.”

He said the foremost question on the mind of everyone in the room is whether the commercial property market has peaked.

“Bull run shows no signs of fatigue”

“After a record year for (commercial property) investment sales in 2016, it looks like Canada will set a new record in 2017,” he said. “This bull run shows no signs of fatigue.”

Morassutti acknowledged Canada’s economic fundamentals have slowed in the latter part of this year and a potentially collapsed NAFTA would pose a threat of real disruption.

He strummed several optimistic, and clearly hopeful, chords in his speech.

“Bull markets do not die of old age,” he said. “For the cycle to end, there needs to be a catalyst; either a major policy mistake, or a significant economic disruption in one of the world’s major economies. In our (CBRE’s) view, neither appears to be in the offing.”

Delving deeper into the various asset classes, Morassuti said retail is performing better than news headlines would suggest.

Retail in slow bleed, but evolving

He characterized the Canadian retail landscape as a slow bleed — but one with increasing separation between static, outdated losers and innovative winners.

“With Sears, it was always a matter of ‘when’ rather than ‘if,’ ” he said, noting Sears’ demise will add about 15 million square feet of space to the Canadian market, which continues to deal with a remaining four million square feet of space left over from Target’s retreat.

But top urban shopping centre owners will continue to carve up their vacated department store spaces, focusing more on attracting new international retailers, more dining and service options, and generating interest and traffic for shopping centres as a whole, forgoing the outdated anchor-tenant concept.

Tech will spark change in office market

In the office industry, technology and artificial intelligence is set to create a shakeup, he said.

“If machines can review mountains of legal documents in seconds rather than days, what does that mean for law clerks and paralegals? And by extension, what does it mean when a law firm’s lease rolls over? Are all of these firms going to shrink?”

Landlords need to prepare themselves for days when-white collar jobs (and traditional office-fillers) like financial advisers and accountants are replaced by the makers of algorithms and block-chain systems in what will clearly be a painful transition, he said.

Meanwhile, the industrial sector continues to face historically low vacancy rates and a massive shortage of product, he said. “In Vancouver and Toronto, we are literally running out of land.”

Multi-family investment and sales continues to represent the lowest volatility of any asset class, especially so in B.C., Morassutti said. “This sector remains rock solid.”

10 Nov

After attracting other tech giants, Montréal International sets its sights on Amazon

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Posted by: James Moysey

After attracting $1.347 billion in foreign direct investment in 2016, and helping to bring Facebook, Samsung and Google-affiliate DeepMind to Montreal this year, Montréal International is now trying to attract Amazon.

Things are going well for Montréal International, the economic development agency tasked with encouraging foreign direct investment in the Montreal region.

Since September, Facebook, Samsung, DeepMind (a subsidiary of Google’s parent company Alphabet), IBM and Thales have all opened new offices in Montreal or announced plans to do so.

Things are happening in the city, said Hubert Bolduc, Montréal International’s president and CEO.

“You’ve got $4 or $5 billion in infrastructure investments happening in Montreal, you’ve got the (Réseau électrique métropolitain), you’ve got buildings growing everywhere, you’ve got 12 hotels that are under construction, there’s never been as many tourists in Montreal,” he said. “There’s a hype about Montreal.”

2016 was a record year for Bolduc’s organization, Montréal International helped attract $1.347 billion in foreign direct investment — when companies from other countries set up or acquire operations here — up from $1 billion the year before.

In 2016, it also doubled the share of that investment coming from the United States to more than $600 million.

Now, Montréal International is hoping to attract Amazon’s second headquarters.

The online retail giant’s high-profile search for a city to host what it calls “HQ2” has attracted 238 proposals from across North America. Vancouver, Toronto, Halifax, Ottawa, Edmonton and Calgary have all made bids — as have numerous cities in the U.S., and a handful in Mexico.

The company plans to spend $5 billion on the new facility, which will eventually employ 50,000 people.

While much of Montreal’s bid is being kept secret — Amazon requested the bids be confidential — Bolduc said the biggest thing Montreal offers is skilled workers.

“We have the local talent, we have the capacity to attract international talent and that talent, overall, comes in at a very affordable price, so it’s less expensive to hire engineers, lawyers, accountants, tax advisors here in Montreal than it is in comparable cities in North America,” Bolduc said.

The cost of doing business in Montreal is between 20 and 25 per cent less than in other major North American cities, he said. Along with wages, real estate prices, the cost of energy and corporate tax rates are lower here.

There’s also a basket of tax credits, though Bolduc won’t say what’s on the table beyond the standard range of credits that are available to any company.

Quebec’s immigration policies are also attractive, he said, particularly in comparison to the U.S.

Even though Amazon is an American company, Bolduc sees language as a selling point, not a challenge.

“Amazon is a multinational, they need to have access to the most multilingual talent possible, Montreal is the most trilingual city in Canada and probably North America,” he said.

There are also 2.5 million English speakers in the Montreal region, said Christian Bernard, Montréal International’s chief economist and its vice-president of Economic Affairs and Marketing Communication.

That’s more English speakers than in Vancouver, he said.

Companies from English-speaking countries are already setting up shop here, two-thirds of all foreign direct investment in Montreal comes from the U.S. or the United Kingdom, Bolduc said.

While the decision about HQ2 won’t be announced until the new year, Montreal has already become more attractive to U.S. tech companies.

“It’s incredible, the buzz about Montreal,” said Mark Maclean, Montréal International’s director of business development for the West Coast.

That wasn’t the case two years ago, he said, back then Montreal had a reputation in certain sectors “but there was no real buzz about it. Since then, it’s been unbelievable.”

It’s even visible at the airport, Bolduc said.

“10 years ago, Montreal had only 35 direct links abroad, you know how many the have today? Almost 90,” he said. Toronto has 95. “A year from now, we’ll have as many direct flights to other international cities as Toronto.”

By the numbers:

Cities bidding for Amazon HQ2: 238

Expected employment at HQ2: 50,000

How much Amazon plans to spend: $5 billion

Foreign direct investment in Montreal in 2016: $1.347 billion

Number of jobs created or maintained by foreign direct investment in 2016: 3,240

jserebrin@postmedia.com

6 Nov

Downtown Montreal office ‘has never been stronger’

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Posted by: James Moysey

The future looks brighter than it has in a long time for commercial leasing and development in downtown Montreal, panelists agreed during a discussion on the state of the city’s office market.

Montreal Real Estate Strategy and Leasing Conference logo. “I think next year is going to continue to be strong. Downtown has never been stronger,” says Robert Giglio, vice-president, leasing at Bentall Kennedy. “People are interested in the city. We’ve never had more visits from Torontonians looking at buildings and wanting to invest their money here.”

He was speaking at the Montreal Real Estate Strategy and Leasing Conference on Oct. 12.

Things look good for downtown office space and there are no particular reasons to expect a slowdown, says Philip Belliard, senior director, leasing at GWL Realty Advisors. While infrastructure work may cause a few blips, “everything is moving in the right direction for Montreal as a whole,” in terms of confidence, economic growth and employment.

New office development expected soon

Developers have adopted a more conservative approach and “are staying in line and not popping up buildings when they’re not necessary,” Belliard says.

That said, he thinks a new office development for the downtown will likely be announced in the next 12 to 18 months because there are no large blocks of vacant space available. “That’ll prompt somebody to take the lead.”

This has been a “great” year for GWL, Belliard adds, kicking off with the acquisition of 1350 and 1360 René Lévesque Blvd. W. (see Benchmark office deal closes in downtown Montreal). The buildings are 530,000 square feet and 397,000 square feet, respectively.

GWL also completed the sale and leaseback of the 375,000-square-foot SNC Lavalin building at 455 René Lévesque. Together, those moves have added almost 1.5 million square feet to its portfolio.

“I’ve rarely seen Montreal have the growth like we’re in right now.”

He does not see anything changing that situation although the fate of NAFTA negotiations could have some negative impact.

Laurin notes that since much of the space for development on René Lévesque has been taken up by condos and hotels, new downtown office development will likely have to take place in the south.

Live, work, play concept taking hold

Belliard says the development of residential condo buildings on René Lévesque has helped with office tenant retention given the concept of live, work and play is one of the biggest drivers of decision-making.

However, while residential development in an area that has traditionally been home to commercial development has proven to be popular with baby boomers and millennials, it has not taken off with Gen Xers and their families.

Brokers on the panel noted  that while downtown is doing well, it is often tough to find takers in the suburban markets of St. Laurent and Laval.

The expansive St. Laurent market, which stretches some 16 kilometres along the Trans-Canada Highway, is “a hard nut to crack,” Beillard says. There were 52 options for tenants looking for between 4,000 and 8,000 square feet in St. Laurent the last time he checked.

“It comes down to, ‘How do you make sure your employees can get to your buildings?’ We all have buildings that are in good shape, that show well, that the tenants tend to stay at. It’s just trying to get them there.”

Class-B building owners reinvesting

Belliard notes there has been a significant flight to quality of tenants moving from class-B to class-A properties “because they need to densify and modernize.” As a result, class-B building owners need to reinvest to retain tenants, often in areas tenants can’t see but definitely can feel – from HVAC systems to improved mechanics in the elevators.

“Definitely, location is not the only thing that counts anymore. You have to be ahead of the curve. There are some landlords in Montreal that have ignored this reality.”

Giglio says commercial landlords who are currently finding it difficult to lease their spaces have to reposition their buildings to provide upgraded and additional services, such as better Wi-Fi, to accommodate a growing millennial workforce.

“When you’re sitting at 25 or 30 or 40 per cent vacancy, you’re also in a position to be a little bit more aggressive, to give a little bit more incentives to a new tenant.”