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A deserted Sainte-Catherine Street in downtown Montreal, on April 6, 2020.CHRISTINNE MUSCHI/THE GLOBE AND MAIL

The revival of Montreal’s financial centre remains as elusive as ever.

For months, employers and political leaders in Canada’s second-biggest city have articulated fears that their downtown – known for its chic conviviality – would slip into decay as some 300,000 office workers shun the area and keep working remotely.

Now, new research is raising questions about the extent to which that deterioration can be reversed.

The relatively smooth rollout of Quebec’s vaccine passport system, the province’s high inoculation rates, and the return of students and tourists have helped Montreal’s main business district pick up momentum and avoid a ghost-town scenario. But a fourth wave of COVID-19 infections is fuelling doubts about the area’s future.

“The possibility of recovering a general level of activity similar to that before the pandemic remains out of sight,” Quebec’s Urban Development Institute (UDI) and Montréal Centre-Ville say in their most recent quarterly report on the state of the downtown, published Wednesday. “There are some clear patches in the sky but lots of clouds.”

Nineteen months after the pandemic forced Quebec into a widespread lockdown, Montreal’s once-vibrant downtown core is alive but sputtering. The white-collar professionals who fuel its microeconomy – the sharp dressers who spend millions of dollars a year in its shops, restaurants and salons – are only trickling back to the office, raising fears of a permanent exodus that would reshape the downtown in ways that are only now being understood.

The latest data – pulled from a variety of sources, including traffic counters – offer little in the way of reassurance. They show that commercial vacancy rates are climbing and that the operations of a significant percentage of retailers, restaurants and other service providers are still on temporary or permanent pause. On the bright side, new and existing condo sales suggest the downtown remains appealing for thousands of people.

It’s a familiar problem across Canada. In Toronto’s financial district, uncertainty about the repopulation of Bay Street’s office towers is causing deep worry among merchants in the 30-kilometre-long network of retail tunnels beneath the city centre. In Calgary, downtown office towers are about 30-per-cent vacant, wreaking havoc on municipal finances.

Montreal has its own peculiarities, however. The downtown’s permanent residents, who number barely 40,000, aren’t enough to keep all its businesses running. Few other cities are as dependent on commuters for their lifeblood. What those people do can make or break the city centre’s business base.

A survey of 1,000 downtown employees conducted last month for the UDI report found that while the percentage of people working entirely from home is falling, 77 per cent of respondents said they were still working remotely either full-time or part-time. When people were asked if they wanted to continue working from home after the pandemic, 71 per cent said yes – for at least half their workweek or more.

The Quebec government continues to recommend remote work for companies that are able to do it.

Many of Montreal’s biggest employers are still operating with most of their staff working remotely. Attendance at Fiera Capital Corp.’s downtown headquarters fluctuates between 6 per cent and 10 per cent, and while the financial company is planning a gradual return to the office, it is “encouraging employees to work where they can produce their best work,” spokeswoman Alex-Anne Carrier said. At Hydro-Québec, which once had about 7,400 employees downtown in various locations, “very few employees are in the office,” and the utility will eventually experiment for 12 months with a hybrid model that offers coming into the office two to three days per week, spokeswoman Caroline Des Rosiers said.

Some companies are deciding to decamp. Montreal’s city centre had a 14.2-per-cent vacancy rate for all classes of office space in the third quarter, up from 10.3 per cent before the pandemic, according to the new report. Demand has decreased even for so-called Class A office space, the high-end real estate that makes up the bulk of downtown leasing.

“The situation is not as good as what we had hoped for at the beginning of the year,” UDI head Jean-Marc Fournier said. Still, he noted some positive statistics: 53 per cent of downtown leases signed this spring and summer were renewals. And of the companies that ended their leases, half signed new ones elsewhere downtown – though shorter leases are the trend.

At the end of last month, roughly a third of business locations zoned for retail and located in shopping centres or concourses downtown were closed, either permanently or temporarily, the new report shows. On Sainte-Catherine Street, the area’s main shopping artery, 17 per cent of shops are vacant and 3 per cent are shut for the time being, the numbers show.

The absence of workers downtown is having other ripple effects on Montreal, notably on public transit. Before the pandemic, it was the choice of 58 per cent of people coming into the downtown, according to the report. Since then, car usage has jumped – clogging up roads once again while the city’s subway, bus and commuter train networks remain underused.

Montreal’s transit agency warned recently that it could be forced to make major cuts to service next year if it can’t find additional sources of financing to balance its budget.

City and local groups made a valiant effort during the summer of 2020 to inject some life into Montreal’s core with a campaign called “Relancez l’été,” or “Jump-start summer.” The Chamber of Commerce of Metropolitan Montreal joined the effort and last month announced the selection of several signature creative projects to encourage the return of workers to the downtown core and boost the area’s attractiveness, part of a campaign called “I love working downtown.”

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