Brivia Group remains bullish on the multiresidential sector in downtown Montreal and is proving so by kicking off two new rental and condo developments in the city’s core.
“We have so much confidence in downtown that we’re actually launching two projects,” said Irene Peng, vice-president, corporate affairs at Brivia Group, speaking at the Montreal Real Estate Forum during a panel on the state of the city’s multiresidential market. The forum was held virtually on May 12 and 13.
The rental project, called the Link Apartments, consists of “micro-apartments” in a 19-storey building at 1664 Lincoln St., close to Concordia University. Apartments will be furnished and the building will include a fitness centre and rooftop “urban chalet.”
Leasing activity will begin next winter.
The condo development, the recently announced Le Mansfield, will rise at the corner of Ste-Catherine and Mansfield Streets next to the Sun Life Building and across from Place Ville Marie.
“The location really sells itself,” Peng said of the estimated $200-million development. It will be built in partnership with Tianqing Investment Group, the Canadian subsidiary of Chinese real estate company Gansu Tianqing Group Real Estate.
“We had done a lot of homework before deciding to launch this project,” she said. “Buyer sentiment is very positive (and) the inventory for new condos downtown is actually at a historic low level.”
Former Loews Theatre, Mansfield Athletic Club
Vincent Shirley, director innovation and growth strategies at Altus Group, noted Le Mansfield is one of the first major projects in the downtown core to launch in 2021. The 19-storey, 248-unit condo development will begin construction this summer and is to be completed in 2024.
It will replace the 104-year-old former Loews Theatre, much to the ire of conservation groups such as Heritage Montreal. Brivia has promised to retain some architectural “reminders” from the building.
Brivia acquired the 50,000-square-foot site, which was most recently the Mansfield Athletic Club, in 2019 at a price reportedly in excess of $20 million.
The developer says the project will include a pedestrian pathway on Cathcart Street, linking Mansfield Street to Dorchester Square.
Downtown rental market picks up
Peng said Brivia has received much more interest since January from people seeking September rentals downtown, due in large part to plans by Montreal universities to return to in-person classes this fall. “It’s a good sign.”
Along with continuing to build in downtown Montreal, Brivia is expanding to the suburbs, a move Peng said began prior to the onset of the pandemic.
“Suburbs have changed a lot and are much denser with very good potential for developers like us.” Although there have been fewer transactions since the pandemic began, land costs have continued to increase in the suburbs, she said.
However, while Peng said it makes sense to build projects with more density close to existing shopping malls or transit networks, it can be a long process to obtain construction permits outside the city core.
Brivia has run into stumbling blocks in its quest to build a high-density rental project on St-Jean Boulevard, south of Hymus Boulevard in Pointe-Claire on the West Island of Montreal. It has faced opposition from residents who say the proposed high-rise is too large for the area.
Downtown owners diversify in suburbs
Elsewhere on the panel, Patrice Ménard, president of real estate agency and mortgage brokerage PMML, noted real estate investors with holdings in downtown Montreal have shown increased interest in buying developments worth $30 and $100 million in the suburbs around Montreal.
“People downtown are seeking to diversify to the suburbs because the demand is there,” he said, adding many real estate people under-estimated the importance of the foreign student clientele to the downtown Montreal rental market.
“While the vacancy rate has increased in a major way downtown, once you leave postal codes where there are many foreign students, vacancy rates are very low,” Ménard said.
Alexandre Godbout, vice-president of Atwater Properties, which has multiresidential holdings throughout the Montreal area, estimated the overall rental vacancy rate downtown stands at about 25 per cent. However, if things pick up by September, Ménard hopes to see downtown vacancy rates fall to three to five per cent by the beginning of 2022.
Ménard added that many real estate players who were in the industrial, commercial and office sectors have launched multires projects this year to balance their portfolios, meaning “2021, 2022 will still be very aggressive for multires.”
Seniors residences hit by pandemic
On the seniors residences front, the ravages of COVID-19 has had a major impact, said Richard Brasseur, president and COO of Corporation Immo 1ère, which owns a number of seniors residences and rental properties in Quebec.
“These are critical moments for seniors residences,” he said, noting vacancy rate are in the 10 to 15 per cent range when they should be three or four per cent.
Given the number of deaths among seniors in Quebec’s publicly run seniors homes, known as CHSLDs, “people are not reassured about going into seniors residences. Our goal is to bring them back and make them feel safe.”
To reassure residents, Corporation Immo 1ère will modernize lobbies, common areas and dining halls at a number of its seniors residences.
The company should be in a very good position when vacancy rates normalize as it is almost debt-free, unlike many of its competitors, Brasseur said.
More than 35 seniors residences in the province have closed since January because they can’t compete, given increased costs, he said. He sees a continuing reduction in the number of residences with fewer than 100 units.