In tandem with an institutional partner, Kevric Real Estate Corporation yesterday closed its purchase of a major downtown Montreal office tower located at 600 de la Gauchetière W., and in doing so hopes to capitalize on the city’s low commercial vacancy rate.
“The relaunch of Montreal’s economy has been very much dominated by the tech sector, multimedia sector, special FX sector and AI, so those are all key areas for us,” said Kevric’s President Richard Hylands. “Those potential tenants are located in suburban locations and are heading back downtown because their millennial workforce doesn’t want to move into the suburbs.”
The 28-storey tower, which has 710,000 square feet of leasable space, currently houses Raymond Chabot Grant Thornton, Investissement Quebec and National Bank, but the latter will be vacating for another location. In the interim, Kevric has an institutional lender on board until 2023, by which point its refurbishments—a new lobby facing Square Victoria and external building work—are slated to conclude.
Downtown Montreal is already a hub for the aforementioned sectors, as Hylands noted that south of 600 de la Gauchetière W. is Multimedia City, owned by Allied REIT, where many of businesses in those industries are housed. Kevric also owns the Air Canada building where Shopify is a major tenant.
“There’s not very much space in Montreal’s core,” said Hylands. “There’s always going to be competition for land because the residential prices people are willing to pay makes it difficult to do new office space.”
However, according to Toronto-based Michel Durand, president and CEO of Multi-Prets & Mortgage Alliance Commercial, downtown Montreal’s commercial real estate sector has already received plenty of investment from abroad, a trend he reckons will persist for at least half a decade.
“The Montreal market is finally seeing its share of the Asian influence, which we saw in Vancouver about 10 years ago and then it moved to Toronto when things got overcrowded and overpriced. Now we’re seeing a lot of development money moving into Montreal, which we’ve witnessed over the last three years and which, I think, is a trend that’s going to stick for at least the next five years,” said Durand.
As Toronto and Vancouver remain markets where the price of doing business is, put gently, exorbitant, Montreal should continue reaping the benefits. It started in the city’s residential sector and has begun permeating Montreal’s commercial market.
“Residential is a catalyst for commercial development,” continued Durand. “Once investors and developers get a taste of how easy it is on the residential side—we’ve seen a lot of condos and towers go up from Asian investors—which is where they start, then they go into commercial development, like office buildings and new retail plazas, by partnering with local players.”
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