Download Montreal

Montreal
2
The Canadian Quartet: Playing on the World Stage
Montreal's City Dynamics:
The Cosmopolitan Heart of the Country
The creative remedy
One of Montreal’s distinctions is its reputation as a creative city, with its wide cross-section of media, fashion
and design firms combining with its restaurant, art and nightlife to offer a markedly vibrant scene. With over
200,000 students and cultural industries' workforce larger than Sydney’s, Montreal is alone in the northern
half of North America for having a visible late-night Mediterranean culture.18 While it does not quite match
Vancouver and Toronto in liveability indices, the city is still attracting numerous multinational firms looking
to take advantage of a highly educated workforce. In 2013 for example, Swedish telecom giant Ericsson
announced its project to build a C$1.3 billion, 40,000 square metre global R&D centre in Vaudreuil-Dorion just
west of the Island of Montreal.19 The city’s growing embeddedness in the global corporate economy sees it
placed 58th in the biannual ‘Globalization and World Cities’ assessment, a significant 24 place improvement
since 2008, putting it in a similar league as Berlin and Dallas for global business links.20
A revitalized city
Montreal effectively lost C$50 billion of corporate assets to Toronto in the 1970s. Inheriting large debts from the
previous expensive cycle of projects, the city was left in the economic doldrums for nearly a decade. Since the
1980s, Montreal’s business and political leaders have sought to reposition and revitalize the city as Canada’s
cosmopolitan and innovative nerve centre.21 A signal of some success is that Greater Montreal was awarded
the prize for 'Best Major American City for Foreign Direct Investment (FDI) Strategy' in fDi Magazine's American
Cities of the Future 2013/14 rankings, coming ahead of the other 126 major cities across the Americas that
enter for this category.
New IT and biopharmaceutical R&D sectors have been highly successful in driving the new post-industrial
economy, especially in districts such as Old Montreal, Lachine and Cité du Multimédia. Today, new hubs are
emerging in the CBD and Midtown markets. For example, the Montreal Technopole / Quartier de la Santé,
located on the east side of the CBD, is being fuelled by the construction of the new CHUM hospital and will
be characterized by government-owned research and development buildings. Elsewhere, located on the
south-west border of the CBD, the Quartier Innovation is a joint effort by McGill University and ETS (École de
technologie supérieure) to create the largest concentration of information technology and multimedia workers in
Canada.
Knowledge in numbers
The success of Montreal’s affordable higher education offer outstrips that of its domestic rivals, reflected in
it having the highest number of university students per capita of any city in North America. The city’s R&D
incentives are world-leading and, alongside Boston, it is the only North American city in the top 10 in the QS
University rankings. With a large and diverse student population, Montreal gets its strongest score in the
‘student mix’ category of the Best Student Cities index. This notable student appeal wins it a 9th placing in
popularity and a 21st position in the world in the wider university rankings.22 Universities have a strong link
to future real estate opportunities as they often act as a focal point for and around which other real estate
developments will emerge, a benefit which Montreal can leverage as ‘knowledge cities’ become an important
focus of future investment.
JLL | World Winning Cities Series
Governance and leadership – reviving the global vision
Montreal has a complicated system of isolated municipalities and layered governance, and a radically
decentralized system has seen power transfer from the mayor’s office towards the city’s 19 boroughs. As a
result, a variety of plans from the central city and large suburban boroughs overlap and the Montreal Metropolitan
Community faces challenges of co-ordination as a metropolitan planning agency. At the same time, the lack of a
unified metropolis has constrained the city’s global vision.
Add to this the much publicized problems of corruption, mounting debt, infrastructure and payroll costs, and the
challenge for new Mayor Denis Coderre to regain true leadership of the city is clear. Mayor Coderre has made
an impression even in his first three months and the 2014 city budget could mark a shift towards greater fiscal
responsibility. There is growing optimism and hopes for a better relationship and a sharing of resources between
the city and its boroughs, as well as a more unified approach to competing for big projects and forming strategies
to retain talent, families and businesses.23
3
4
The Canadian Quartet: Playing on the World Stage
Strategies and mindsets for the future
Despite strong global city rhetoric, the city still lacks a defining image, even though it has established itself as a
proficient centre for design, innovation, project management and cultural expression. Downtown Montreal does
not attract the same concentration of corporate activity or high-density housing as seen in Toronto and Vancouver,
and the business community is arguing for far greater emphasis on the central city as the stimulus for the rest of
the metropolitan economy. This process is made harder by a decline in public trust in the political process and
the municipal administration, although this has recently begun to be addressed.
The Montreal Development Plan (MDP), however, does take stock of the city’s strategic vision for the next
20-year cycle. It calls for investment-led transformation of underground and surface infrastructure, cultural and
sports facilities, and economic positioning. It looks to lead the city towards values of sustainable public and
private sector-led development, while embracing innovation, creativity, research and education. It recognizes
the city’s assets to be its downtown cultural vibrancy, inclusivity, diverse knowledge economy, distinctive
neighbourhoods, green space, and capacity for transport-led growth.
“Montreal has a reputation as a city with an
enviable quality of life. The mix of activities,
housing and parks, the proximity of shops
and services and community facilities and an
efficient public transit system, along with vibrant
neighborhoods and a climate of social tolerance
and inclusiveness, all contribute to this reputation”
Draft Montreal Development Plan, 2012
A new value add
The MDP identifies the land availability and development potential around metro and train stations and areas
near the highway 15-40 and 25-40 interchanges as key to achieving greater density and diversity by 2020. It
also prioritises expansion of the port zone in the l’Assomption district to build the city’s role as a shipping and
logistics hub.
In terms of economic development, a lot of momentum has built up around the consolidation of seven high-value
metropolitan clusters. These clusters – aerospace, audio-visual, clean technology, financial services, ICT, life
sciences and logistics – are seen by business and Quebec province representatives to possess the critical mass
for the city to be competitive through the next cycle.
JLL | World Winning Cities Series
Montreal
Montreal Development Plan
In downtown Montreal and its central
neighbourhoods, it is important to continue
strengthening economic, cultural, education,
research and healthcare activities. In
addition there are opportunities in the
Western and Eastern employment and
economic centres and areas near the
highway 15-40 and 25-40 interchanges
that will make it possible to achieve greater
urban diversity and density.
Montreal Development Plan, April 2013
5
6
The Canadian Quartet: Playing on the World Stage
Montreal's Real Estate Dynamics:
A Dense, Dynamic and Welcoming City
Montreal’s commercial and residential real estate market is the second largest in Canada, and although the city
has been facing some political instability in the last 18-24 months, investors and developers still see opportunities
for attractive real estate investment returns. Montreal saw the strongest growth in direct commercial real estate
activity among the Quartet cities in 2013 with volumes nearly double those of 2012 levels.
Condominiums to boom
In terms of residential real estate, Montreal remains a dense, dynamic and welcoming city benefiting from one
of the best standards of living in North America. Home prices and average rents continue to be lower than other
major Canadian cities and the market is expected to see moderate growth over the next several quarters. The
condominium sector will continue to experience the biggest boom in the next two years with the market forecast to
expand by nearly 15%. This acceleration is arriving as unit deliveries in cities such as Toronto and Vancouver are
poised to begin decelerating.
A retail foothold
Montreal continues to be an attractive market for American and European brands looking to open a first location
in Canada. Although personal incomes in the city remain slightly lower than the Canadian average, the city has
recovered the jobs lost during the Global Financial Crisis. The level of construction is stable and consumers have
not reduced their discretionary spending as much as anticipated; the vitality of the sector will continue to benefit
from a steady increase in income and expenditure per person. Investors expect a rise in retail rents and values
equal to or slightly higher than the general rate of inflation over the coming years.
Office vacancy rates and affordability on the rise
The Montreal office market is the second largest in Canada and represents roughly 19% of the country’s total
office space. Although net absorption was positive in 2011 and 2012, the market experienced deteriorating market
conditions and weaker leasing momentum in 2013. As a result, and in combination with increased amounts of
new supply, the total vacancy rate has risen above 10% for the first time since 2006.
With corporate demand for modern top-tier facilities, another 2.75 million square feet of new office space is set
to be added to the market in the next two years. Despite the space left behind following upgrading, we expect
the vacancy rate to continue rising. On the upside, with an average gross rental rate below the national average,
Montreal remains affordable relative to the other cities in the Quartet.
Industrial shows improvement
The industrial market has also seen improving market conditions since the Global Financial Crisis. The strength
and diversity of its economic structure and its surplus inventory has allowed Montreal’s industrial market to post
decreasing availability rates while maintaining affordable total rents. Despite this, new projects centred on recent
infrastructure and transportation developments are being delivered off the Island of Montreal.
JLL Canada: Offices
Calgary
300, 129 – 8th Avenue SW
Calgary, Alberta T2P 1B4
Tel +1 403 456 2104
Mississauga
110 Matheson Blvd West
Suite 107
Mississauga, Ontario L5R 4G7
Tel +1 905 502 6116
Ottawa
275 Slater Street
Suite 1004
Ottawa, Ontario K1P 5H9
Tel +1 613 656 0145
Toronto North
251 Consumers Road
Suite 910
Toronto, Ontario M2J 4R3
Tel +1 647 728 0457
Edmonton
10235 101 Street
Suite 1331
Edmonton, Alberta T5J 3G1
Tel +1 780 328 2550
Montreal
1 Place Ville Marie
Suite 2121
Montréal, Québec H3B 2C6
Tel +1 514 849 8849
Toronto
199 Bay Street
Suite 4610, Box 407
Toronto, Ontario M5L 1G3
Tel +1 416 304 6000
Vancouver
400 Burrard Street
21st Floor
Vancouver, British Columbia V6C 3A6
Tel +1 604 998 6001
Contributors:
Rosemary Feenan
Global Research
[email protected]
Tel +44 7399 1198
Contact:
Jeremy Kelly
Global Research
[email protected]
Tel +44 7399 1199
Josh Gelormini
Americas Research
[email protected]
Tel +1 312 228 2060
Lucy Fletcher
JLL International Capital Group
[email protected]
Tel +1 604 998 6015
Thomas Forr
Canada Research
[email protected]
Tel +1 416 304 6047
David Green-Morgan
JLL International Capital Group
[email protected]
Tel +65 6494 3728
Brett Miller
President, JLL Canada
[email protected]
Tel +1 416 304 6042
For further information,
please visit our website:
www.jll.ca
With special thanks to ‘The Business of Cities’ for their contribution.
For more information on cities around the world visit the new JLL Cities Research Center
The JLL Cities Research Center is our new interactive and intuitive web-based platform. It holds our World Winning Cities research and is
linked to all JLL’s city research from around the world. The site is packed with a wealth of visualisations, comparative data, insights, blogs,
articles and videos providing a unique perspective on cities, their performance, plans, politics and real estate opportunities.
jll.com/cities-research/
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014. This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed,
which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in the report
is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are forward-looking involve known and unknown risks
and uncertainties that may cause future realities to be materially different from those implied by such forward-looking statements. Advice we give to clients in particular situations may differ from the views
expressed in this report. No investment or other business decisions should be made based solely on the views expressed in this report.