Downtown Montreal in intensive care

Despite the best care in the world, Quebec’s main wealth creation hub is connected to the artificial respirator. A coalition of organizations dedicated to the economic development of downtown Montreal released a health report for the business district on Thursday. Five digits to see the severity of symptoms.

André Dubuc
Press

26 %

As of August 20, one in four businesses or restaurants had closed, either temporarily or for good. Restaurants and bars are on the front line. For example, one in three fast food establishments have fallen in battle or fled the battlefield. In office towers abandoned by their occupants, one in two businesses is now closed. In Sainte-Catherine Street and in the underground shopping arcades, it’s a little better: 18% of businesses are empty or temporarily closed. At the initiative of the Urban Development Institute of Quebec (IDU), in conjunction with Destination center-ville and with the financial participation of the City of Montreal, the coalition also had a web survey conducted among 1000 people from the census metropolitan area (CMA). Three in four respondents say they have never been to the city center since the start of the pandemic.

2,850 new homes

Rare good news, condominium and rental housing starts have jumped 41% in the downtown core in the first three quarters of 2020 compared to the same period last year. Nearly 2,850 homes were built this year, compared to 2023 last year. “These are essentially projects that were planned, approved and sold before COVID-19,” notes Vincent Shirley, senior director, innovation and growth strategies, real estate development expert services at Altus Group. He participated in the afternoon webinar hosted by Jean-Marc Fournier, the new boss of the IDU. “I expect a slowdown in 2021,” added Mr. Shirley. Indicators are indeed worrying. Unlike the suburbs, where the resale of condos is showing surprising growth, resale of condominiums in the city center has fallen by almost 20% at an annualized rate after nine months. The market, from hot as it was before the pandemic, is loosening quickly and is now balanced downtown, meaning it does not favor either buyers or sellers. The situation is likely to deteriorate further, as the number of new condo listings on the market has jumped 41%.

92% of white-collar workers want to stay telework

The office market is holding up for the moment. As the principal economist of the Desjardins Group, Hélène Bégin, recently pointed out, the offices react with a delay of 18 to 24 months to a turnaround in the economy due to the length of the leases, between 5 and 10 years. The deterioration in the occupancy rate of the towers in the city center therefore remains minimal at present. A harbinger of dark days to come, the premises re-sublet are on the rise, but their surface area remains low all in all from a historical perspective, underlined Bernard Poliquin, Executive Vice-President, Office and Industrial, and Chief real estate transactions at Cominar. The game is not yet over. Currently unloved, office towers could be left unoccupied longer than desired. The coalition’s probe shows that 92% of downtown workers currently teleworking want to stay there after the pandemic, either full-time or part-time.

Towards an occupancy rate of 5%

There is danger in the house, warns Yves Lalumière, CEO of Tourisme Montréal. “There is a risk that Montreal will experience a destructuring of the tourist offer,” he stressed during the webinar. Revenue per available room is $ 26 in 2020; it was $ 187 last year. “We expect a room occupancy rate of 5% for the next three to five months,” he said, adding to fear the permanent closure of several establishments. “If this is the case, he continued, we will lose the hotel capacity to hold major events such as the Lions Congress where 17,000 people are expected in 2021”. He calls with all his wishes for the rapid development of a new brand image for Montreal. The city of festivals must give way to the image of an open-air leisure island with its river. “Montreal’s reputation has suffered enormously,” he regrets. Yves Lalumière says that without substantial financial assistance for the hotel sector, Montreal will go back 10 or 20 years in terms of its tourism performance.

One in ten students

Enrollment in our post-secondary institutions continued this fall. But students take their classes from the comfort of their own homes, far from the city center. Only one in ten students travel to campus. Instead of being 125,000 cégépiens and students to take part in the animation of the city center, they are less than 13,000 to show the end of the schoolbag there. An international student city, Montreal suffers from border closures. The number of foreign students fell by 7% at the start of the school year for a total of 22,450 students from outside the country. A drop of 7% is less than we might have feared at the start. One hypothesis would be that many people take their online courses from their home country.