Jonathan Wener, founder and chairman of Montreal-based developer Canderel. He is also Chancellor of Concordia University. (Courtesy Concordia)

The Quebec government and the Caisse de dépôt et placement du Québec “have erred terribly” in charging a royalty to developers who build near stations on Montreal’s new REM automated, light rapid-transit line, says Jonathan Wener, founder and chairman of Montreal-based developer Canderel.

To finance a portion of the Réseau express métropolitain’s construction, Caisse subsidiary CDPQ Infra has been given the right to charge developers a royalty fee of $10 per square foot for new building permits granted within one kilometre of the 26 REM stations. (The Caisse is Quebec’s institutional fund manager.)

“I have to say I’m rebellious about how the government agreed with the Caisse about the taxation. I think it doesn’t bode well for affordability around a REM station (for residential developments),”  he said.

By contrast, he noted, Montreal’s Metro system was fully paid for by taxpayers. “I don’t understand the distinction between a REM station and a Metro station. It’s mass transit,” he said.

Wener was speaking Sept.15 at a webinar on the future of residential real estate in the downtown core during Concordia University’s Homecoming event.

Wener, the chancellor of Concordia and a 1971 Concordia commerce graduate, recently made a $10-million donation to the university.

That led to last week’s opening of the Jonathan Wener Centre for Real Estate at Concordia’s John Molson School of Business. The first-of-its-kind in Canada centre aims to be a hub for teaching and research on commercial and residential real estate.

More development near Montreal REM

Heather Kirk, the senior vice-president and chief financial officer of residential and seniors residence developer Groupe Sélection, who also spoke at the webinar, said the desirability of areas that are “within spitting distances” of REM stations will be improved as a result of the new transit system.

Strip malls close to REM stations will likely be transformed into residential properties and interest for some suburban office buildings that were suffering from lower vacancies will likely increase, she said.

Wener noted there has been a “tremendous” increase in residential densification in downtown Montreal over the past decade.

It’s been driven in large part by developers reacting to the needs of empty-nesters or couples working downtown who were fed up with daily commutes.

“We surveyed people and we found many were driving in either Sunday night or Monday morning, staying until Friday afternoon and then going back home – almost treating their full-sized home as a country home in order to avoid the commute.”

Wener said for downtown Montreal to continue to be an alternative to suburbs, governments will have to change their attitudes about schooling. More elementary schools and high schools are needed in the downtown core.

“Many families are begging for primary and secondary education,” Wener said, and authorities will have to think outside the box by creating schools in high-rise buildings, as has been done in New York and Chicago.

Work-from-home changes housing trends

Heather C. Kirk is senior vice-president and chief financial officer at Laval-based Groupe Sélection. (Courtesy Cominar)

However, with more people working from home as a result of the coronavirus, the desirability of cottages in places like the Laurentians north of Montreal has skyrocketed, Kirk noted.

“The desirability of owning a cottage that you can be at four days a week, or seven days a week, is completely different from what it would have been a year ago when you were driving through traffic on Friday night and driving back home through traffic on Sunday,” she said.

“I think COVID is absolutely going to change where people will seek out to have their primary residence, if you’re able to be there more frequently.”

Kirk, formerly the CFO at Cominar before moving to Sélection in May, said Covid-19 has resulted in a dramatic acceleration of trends. “It is a cultural shift for many people. I never worked in an industry where work from home was particularly socially acceptable. It’s game-changing.”

Wener said there is an affordability issue for people now working out of condos, who would like to have home offices. “I don’t think somebody who could buy a 650-square-foot unit is now going to buy a 1,200-square-foot unit.”

Optimize space in homes

Instead, he predicted there will be a redesign of bedrooms, which are only used for about eight hours a day. He said beds could be redesigned so they flip over and transform into desks.

“What’s going to happen is the need for a broader use of our accommodations,” Wener said. “Developers, in concert with furniture designers, are going to react to the needs of the users in an affordable way that will allow them to be able to use their space better.”

Wener also pooh-poohed companies which have declared they will kill office space with all employees to work from home.

“People have a need to congregate, to work together. You can operate a company on Zoom. You cannot build a company on Zoom.”

Wener said there was already a move afoot to change how offices are laid out as employees expressed high dissatisfaction with companies that had reduced average office space from 300 square feet per person to as few as 90 square feet.

“I see a return to closed offices (and) the ability for employees to have some level of privacy rather than being in a bullpen,” he said. “Maybe it won’t be 300 square feet, but it will be 200 square feet per person.”

This increase in per-employee office space will compensate for the people who choose to work from home, he said.