Under the watchful gaze of a wall-sized poster of Montreal Canadiens goaltender Carey Price, a brand-new commercial office tower is poised to rise from a pit next to the Bell Centre, Montreal’s sports and entertainment complex, and when complete, will connect directly to the hockey arena from its lobby.
But what’s remarkable about the Deloitte Tower – as the building has been named in honour of its professional services firm anchor tenant – is not just its location at Avenue des Canadiens-de-Montréal next to a hockey shrine, or its list of worker and environmentally friendly features, but that it’s being built at all.
The $200-million building will be the first new, privately owned commercial office tower to sprout onto the city’s skyline in more than 20 years, signalling a resurgence in commercial office development in the city.
“There has been a decrease in vacancy and small growth in business, so there was some pent-up demand,” Bernie Marcotte, senior managing director with commercial property firm Cushman & Wakefield Ltd., says of the call for more Class A office space in Montreal.
The last (and tallest) office towers to be delivered to the Montreal market were the 51-storey tower 1000 de La Gauchetière and the 47-storey 1250 René-Lévesque, both of which opened their doors in 1992. But as Mr. Marcotte explains, a soft market tempered demand for new stock in the ensuing period.
Much has changed in recent years, he says, noting that Deloitte Tower developer Cadillac Fairview has been quietly acquiring land around the Bell Centre in downtown Montreal’s southwest corner, monitoring key market drivers and waiting for the right opportunity to break ground on its new building.
“I think [Cadillac Fairview] is confident that the economics are there, and there’s a trend away from the older downtown core on Sherbrooke Street,” Mr. Marcotte says.
Just how sound are those fundamentals? According to Cushman & Wakefield data, commercial office vacancy rates across all classes in Montreal sat at a healthy 6.6 per cent in the first quarter of this year, with gross average rents of $33.32 per square foot being charged in the downtown core. By comparison, other major Canadian cities such as Toronto and Vancouver had tighter vacancy rates of 4.6 per cent and 4.9 per cent in the same period, respectively.
The Deloitte Tower isn’t the only skyscraper poised to alter Montreal’s skyline in the coming years. Other mixed-use, residential-commercial buildings such as the Aimia Tower – featuring more than 230,000 square feet of Leadership in Energy and Environmental Design (LEED) certified office space – and L’Avenue, which will offer hotel and retail opportunities, are expected to welcome tenants in the next two years.
“We were in need of something new because the inventory was aging in Montreal, so much so that a few of our Class A properties would be classified as Class B in other Canadian cities,” explains Alexandre Sieber, the Montreal-based senior vice-president and managing director at commercial property consultancy CB Richard Ellis Ltd.
Mr. Sieber predicts Montreal could also see some retrofitting of older downtown core towers as landlords struggle to remain competitive with their shining new rivals across town. The goal: attracting top tenants, many of whom demand features such as LEED certification or more flexible work spaces to suit a new generation of workers.
Cadillac Fairview was well aware of the demands of its target tenants when designing the 26-storey Deloitte Tower – the first phase of its $2-billion projected plan to develop more projects on property around the Bell Centre. The building will include 495,000 square feet of office and 20,000 square feet of retail space, of which anchor tenant Deloitte will occupy 160,000 square feet for the roughly 1,100 full- and part-time employees who will call the tower home by the fall of 2015.
It’s no surprise given current office design trends that some of the tower’s most significant features are sustainability-focused. The Deloitte Tower will be Montreal’s first LEED Platinum office building, promising to use 30 to 40 per cent less energy and water than average office buildings. It will also offer premium air filtration, daylight harvesting to reduce power consumption, and provide bike storage and electric car parking stalls to tenants.
They’re all critical features for attracting Gen Y professionals, according to Sal Iacono, senior vice-president, development and portfolio management for Cadillac Fairview in Eastern Canada. Many of those up-and-comers prefer working in sustainable buildings with open-concept offices replete with collaborative spaces, just steps from transit or their homes – in many cases the new condo towers sprouting up across downtown Montreal – and close to amenities such as the restaurants and shops that surround the Bell Centre.
The Deloitte Tower will also feature a world-class restaurant and a courtyard reflecting pool that will serve as a skating rink in winter. That outdoor space incorporates land once used by the tower’s next-door neighbour, historic Windsor Station – one of Montreal’s most beloved heritages spaces and, until recently, one of its most important transit and rail hubs.
As Sheila Botting, a Toronto-based senior practice partner with Deloitte’s real estate division, notes, these are exactly the kind of unique amenities that firms such as hers seek out when scouting new locations to house their growing work forces.
“When we make a decision to find space in a market that will accommodate our requirements, we look at it in terms of recruitment, retention and brand, whether the building offers the technology we need, whether the amenities nearby are good for our employees, what the transit is like and what the costs are of being in the building,” Ms. Botting says.
“Sustainability is also becoming a really important consideration … so when you look at the features of a LEED building, they’re attractive features for all employees.”
Proud Montrealers may be aghast to learn that Cadillac Fairview’s inspiration for developing the lands around their hockey shrine were actually born down Highway 401 in Toronto, where the firm enjoyed widespread success developing the residential and office towers adjacent to the Air Canada Centre, home to the Habs’ arch-rival, the Toronto Maple Leafs.
“Our strategy was, if we had a success in a similar condition elsewhere, where else could we replicate it?” Mr. Iacono says. He points out that Cadillac Fairview’s work to develop lands around the Air Canada Centre was unpopular at first, but as both commercial and residential owners discovered the wealth of amenities the location offered – from transit to entertainment – it soon became a popular mixed-use hub.
“We then asked, are there other areas in Canada where we could do this?” Mr. Iacono recalls. “Montreal was an immediate candidate, the lands were available, so we started to acquire them.”