The opening of Japanese retailer Uniqlo’s first Quebec store last week had the markings of a major happening in downtown Montreal, as hundreds of people lined up for hours outside the Eaton Centre location for a chance to shop at the trendy chain’s largest Canadian outlet. For most in the crowd, it marked their first trip downtown in months.
While the COVID-19 pandemic has taken a major toll on downtowns across Canada, Montreal’s has been suffering more than others as major construction has turned the Ste-Catherine Street into a muddy maze of chain link fences and shuttered retailers. Along a single block across from Uniqlo, at least a dozen stores have closed in the past two years alone.
A report released last week by Quebec’s Urban Development Institute found that more than a quarter of downtown businesses in Montreal were empty in August, while the office vacancy rate in older buildings shot up to 18 per cent in third quarter from 8 per cent a year ago.
That was before Quebec implemented stricter pandemic protocols in September, forcing restaurants and cultural venues to close altogether after allowing both sectors to open partially during the summer.
“Montreal’s downtown is the premier hub of wealth creation in Quebec. Its vitality influences the living standards of all Quebeckers,” said the UDI, which represents commercial real estate owners. “The low occupancy levels of office buildings…has multiple impacts because everything is linked to it – business, culture, quality of life and tax revenues.”
The number of people who frequent the downtown core daily for work, school or leisure has fallen by 90 per cent since February to barely 50,000 souls. Statistics published by Le Journal de Montréal last week showed that the head offices of Hydro-Québec, Caisse de dépôt et placement du Québec and SNC-Lavalin Group are essentially empty, with 95 per cent or more of employees working from home.
Montreal’s core has been especially hard hit because it has proportionally fewer permanent residents than downtown Toronto and Vancouver. Montreal’s condo-building boom came later than the surges in those two cities and there are still relatively few large residential towers in the downtown core compared to other major Canadian centres.
The downtown core accounts for about 63 per cent of Montreal’s hotels. Their occupancy rate in August was 19 per cent, compared to 88 per cent for the same month in 2019. Tourism Montreal projects the occupancy rate will fall to 5 per cent this fall and winter.
As a result, many hotels – including the spanking new Four Seasons Hotel and Old Montreal’s ritzy Hotel St-James – have temporarily shut down. Economists fear the permanent loss of hotel-room capacity will impede Montreal’s ability to attract large conventions after the pandemic.
Montreal Mayor Valérie Plante’s administration last week announced it would offer free parking on weekends beginning in mid-November to encourage Montrealers to frequent local businesses during the Christmas shopping season. Opposition politicians attacked the move as too little too late. Ms. Plante has spent the past three years trying to discourage car use by reducing traffic lanes and parking spaces along major thoroughfares. Indeed, the years-long makeover of Ste-Catherine Street will eliminate parking altogether along the city’s main downtown shopping drag.
Ms. Plante, who is up for re-election in 2021, is facing a tax revolt among downtown business owners who had been complaining about the lengthy construction disruptions and reduced parking before the pandemic struck. The Association des propriétaires de bâtiments commericaux du Québec, led by outspoken restaurant and bar owner Peter Sergakis, is seeking a 50 per cent cut in commercial property taxes retroactive to July 1.
A report released Monday by Altus Group found that Montreal once again had the highest commercial tax rates among the 11 cities studied, with a rate of $36.99 for each $1,000 of assessment. While that is a 2.6 per cent drop from 2019, the rate fell by 4.6 per cent in Toronto to $21.71 and by 28 per cent in Vancouver to $6.73.
Montreal’s commercial-to-residential property tax ratio is also by far the highest, with commercial rates averaging more than four times those faced by homeowners. Toronto’s commercial-to-residential tax ratio is 3.6, while Vancouver’s stands at 2.3.
“Municipalities should recognize that bringing down the commercial-to-residential tax ratio will not only help provide some much-needed relief to struggling businesses during this time but will also make their cities more appealing to businesses going forward,” Altus’s Terry Bishop said in a news release accompanying Monday’s report. “This in turn will help foster job growth and lead to sustainable revenue for the city.”
Montreal’s downtown has experienced major downturns before. It took more than a decade for Ste-Catherine Street to bounce back from an economic lull after the 1995 referendum. Without a major tax relief, it looks to be in for another tough decade.
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