A new chapter

Lost in the frenzy surrounding Quebec City's 400th anniversary last year has been another milestone: Canada's oldest industrial city, Trois-Rivieres, turned 375 this year. And while it's proud of its history, the city is using this year to mark the beginning of a new chapter. Trois-Rivieres is promoting a $400-million development plan for its downtown and waterfront as the legacy of its pivotal birthday.

Trois-Rivieres sur Saint-Laurent, a 10-year plan, will feature Quebec's largest outdoor amphitheatre, a dock, gardens, walking and cycling paths and a pulp and paper industry interpretation centre. Furthermore, the city is selling off 50 per cent of the designated land to developers for condos, a hotel and a technology-based business park.

Indeed, Trois-Rivieres is using this project to reinvent itself after its industrial decline in the 1980s and 1990s, when unemployment rose to 14 per cent, as well as the more recent struggles of its pulp and paper sector. Whereas the city once had four mills, it's down to two, which have been subjected to temporary shutdowns in recent years. The sector has been struggling due to the fall in demand for newsprint throughout North America, which has dropped 10 per cent since 2005.

With one of Canada's oldest populations, attracting and retaining a young, skilled workforce is crucial for the city's future. Traditionally, many of the city's younger residents leave town, either for post-secondary school or to look for employment opportunities after they've graduated from The Universite du Quebec a Trois-Rivieres. The city hopes the aforementioned technology park will strike a chord with young residents. The park will specialize in clean energy, ecological industrial cleaning products and telecommunications.

One symbol of the new economy Trois-Rivieres hopes to create is Marment, which manufacturers and services metal parks for the energy segment. Its clients include oil and gas, metals and mining, pulp and paper, forest and wind energy. The company is one of the three top manufactures of wind towers on the continent.

Attracting and retaining immigrants is also critical to the city's future prospects. It realizes this and has thus put in place a few programs to welcome and retain international immigrants. The initiatives have proven successful. Since 2003, the city has been averaging 500 newcomers a year. This influx of new residents has driven a construction boom in recent years as well, led by the building of new rental properties. Despite the new supply, immigration has outpaced rental construction as the vacancy rate sat at just 1.1 per cent this past year.

While monthly rent for units built after 2000 is $200 more expensive, there is strong demand in Trois-Rivieres for these units-the vacancy rate for such properties was just 0.5 per cent in fall 2008. There is also stronger demand for units with two or more bedrooms. These homes are popular with students and families, who like the versatility that comes with the added space.

Soaring house prices have accompanied the city's construction boom, growing 65 per cent since 2006. Despite this growth, prices are amongst the most affordable in Quebec at around $190,000. This affordability, coupled with demand for rental units, has attracted many investors from areas with higher incomes, such as Quebec and Montreal.

Many of these investors are buying older apartments around the site of the Trois-Rivieres sur Saint-Laurent in anticipation of a ripple effect from the project, observes Realtor James Brown of Re/Max. Specifically, he notices investors purchase apartments with four, six and eight units, some of which sell for under $200,000.

Indeed, there is significant upside in and around the downtown area, which has the oldest rental housing stock in the city at 70 years of age on average. These properties, when not renovated, command the lowest rents in the city and also have the highest vacancy rate. However, like Quebec City, significant development in the city's core should encourage even more wide-scale gentrification in the area. It may be a few years before one realizes a significant return, however, thus calling for a longer-term exit strategy.

From the January 2010 issue of CRE

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