“For Montreal, this cycle of overhaul will be one of the most important infrastructure projects undertaken in over 50 years,” the report reads, as it analyzes the impact this construction will have on downtown businesses and office vacancy rates to ensure it remains competitive.
The report says Montreal is about to undergo a similar scale construction project that Boston did in the early 1990s to 2006. It highlights Boston’s Central Artery/Tunnel Project, and The Big Dig.
“In a response to growing and crushing traffic congestion, The Big Dig re-routed the main highway through the heart of the city, Central Artery (Interstate 93), into the 5.6 km Tip O’Neill Tunnel,” the report reads.
During the nearly 20-year timeline of The Big Dig, Boston’s downtown office rates rose and landlords experienced a marked drop in rental rates.
But there was more to it, said Andrew Maravita, Colliers Montreal managing director. “It was holes in the economy, not holes in the ground, which negatively impacted Boston’s downtown business,” he added.
“The tech bubble bust in 2001 and the international economic financial crisis in 2008 occurred during The Big Dig and shortly after the end of the project. This taught us that bigger picture macroeconomic conditions had a greater impact on the overall health of the office market than the construction did.
“It was these economic factors, even more that the infrastructure overhaul, that explained the rise in vacancy rates and drop in rents experienced in Boston during this period.”
Montreal, according to the report, could be in for much the same thing – unless landlords adjust accordingly.
Colliers International suggests that landlords and their tenants do the following to minimize disruptions: offer improved incentives to employees to promote better accessibility to public transport; further develop the buildings’ amenities; and, when and where possible, promote remote ‘work from home’ opportunities.
“Montrealers will need to endure a few years of construction work with numerous infrastructure upgrades, new condo towers as well as the new Champlain Bridge, but the result will be a significant improvement in the city’s future business competitiveness,” said Maravita.
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With downtown Montreal in the midst of a major infrastructure overhaul, a new report from Colliers International suggests that office landlords could be in for tough times ahead if they don't adjust accordingly.