The 350-year-old cobblestone streets of Old Montreal are always good for a romantic walk, but these days they hold some of Canada's hottest commercial real estate opportunities.
After languishing for decades behind boarded-up windows, dozens of the area's centuries-old buildings are being transformed.
Once again people are pouring into the area as old commercial structures are given new life as condo developments. "Within the last 10 years, the number of people living there has jumped from 5,000 to 50,000," says Mickael Chaput, a broker with McGill Real Estate, who represents multiple properties in the area.
What's to come is even more remarkable. New private and public building and infrastructure projects promise to dramatically raise the district's profile – and property values – in the next decade.
Walking down the streets of the old banking district, though, it becomes apparent from all the à vendre or à louer signs decking the filigreed 19th-century facades for sale or lease that the market for office properties lags behind – but not for long.
"On average in 2012, we will see prices for office space increasing here by $1 to $2 per square foot," said Mr. Chaput, adding that property in Old Montreal has been selling from between $350 to $650 a square foot depending on its condition and location. "Owners are finally starting to get demand for their properties and they want to revamp what they have or sell."
The city's first skyscraper, the 1887 red sandstone New York Life building at 511 Place d'Armes, has had its lobby gutted and the rest of the building redone. "Now it's getting booked month after month," Mr. Chaput says, meaning the elegant eight-storey building with its distinctive clock tower is once again filling with tenants.
Next door at the grey Aldred, the 1931 art deco limestone that mimics the gothic Notre-Dame Basilica across the street, Michel Bensmihen, the agent in charge of leasing, is pleased with the city's $60-million redesign of the central Place d'Armes. Mr. Bensmihen says the refreshed square in front of the building will help to boost its status.
"We're starting to see companies leaving their downtown office space and giving Old Montreal a try," observes Andrew Maravita, Colliers International's managing director for the Montreal region. "The old buildings that have been converted to loft-style space have a very nice feel to them that appeals to technology and knowledge companies and their employees," he adds. "It's accessible and you're right by the waterfront, so it's a fun place to work."
Last year, AbitibiBowater Inc. relocated its head office from downtown to 50,000 square feet of space on the edge of Old Montreal. And lately, Mr. Chaput says, law firms with headquarters downtown are looking to relocate there too. "They've been asking me to find them space in Old Montreal," he says, "since it's becoming very prestigious to have your office there."
New municipal and private building projects already under way will only serve to increase that cachet. To the south, on the waterfront, a $180-million plan to improve the federal lands of the Old Port will establish an urban beach, convert an old warehouse into an international exhibition centre and grow and improve green spaces.
To the west, as part of the more than $175-million Montreal 2025 plan, the city is changing the infrastructure of the raised Bonaventure expressway, which links the island of Montreal to the city's South Shore. "We're going to lower part of the expressway to ground level and split the north and south lanes into separate streets," says Richard Deschamps, vice-chairman of the city's executive committee for economic development and infrastructure.
Already on track for completion in 2014, "the plan will integrate the residential Griffintown neighbourhood, Old Montreal and downtown," Mr. Deschamps says, adding that this pedestrian friendly approach will consolidate and renew the area's economic potential.
Just a couple of streets over to the north from Place d'Armes square, construction of the $2-billion CHUM superhospital is also under way for completion in 2019.
Nevertheless, despite all this activity, there's a disparity in the quality of office space available. Some long-time building owners haven't invested money in turning their assets around and are sitting on properties as they stood more than 20 years ago.
The Royal Bank's first headquarters at 221 Saint-Jacques West remained empty since the late 1980s before being scooped up for a new 43-condo development set to open in 2013, Mr. Chaput says.
"With the vacancy rate relatively low at 5.6 per cent, there's good demand for office space in Old Montreal," Mr. Maravita adds, "but you have to have the right product to attract the tenants out in the market." Pockets of old buildings that are empty or haven't been renovated yet are opportunities to be repositioned for the future.
Those looking to capitalize, however, should ask themselves what they're going to do with the property to make it a viable investment. "You have to really have a purpose of what you're going to do with these buildings," Mr. Maravita says, "because any property sitting in Old Montreal has heritage restrictions on it."
These restrictions make the buildings very expensive to renovate and many have been neglected. "Often the floors are off kilter in these buildings," says Robert Ruscio, a retail designer who has worked in the area. "In one case, we went into the basement and found a problem with one of the support beams."
Parking is another disadvantage, Mr. Ruscio says. "It's very limited and hard to find. The streets are narrow and sometimes your clients or employees will get a ticket." This is a vital issue for those looking to create or purchase office space. "There's no underground parking and that's the major drawback of the area," echoes Mr. Maravita.
Although the city recognizes that parking is a concern, "we're bringing back the streets for pedestrians," Mr. Deschamps says. "We'd like to invite people to walk more, use the subway, buses and the excellent Bixi bike rental system we've developed."
In the end, Old Montreal's European mentality is what makes it unique, Mr. Ruscio says, and he appreciates efforts to keep it that way. "There's no other place in North America where you can experience the same feeling of old world Europe," he says.
"There are still challenges, like finding a grocery store in the area, but you can't replicate anything like it, and properties there will only gain value as time goes on."