There’s no sugar coating the situation when it comes to the Montreal retail real estate market.
“It’s depressed,” said Tony Flanz, President of Montreal-based Think Retail, which consults and represents international, national, and regional retail chains. It also specializes in tenant representation with some landlord mandates.
“If you look 12 months ago, there was a recent article in the Montreal Gazette talking about downtown Montreal a year ago and how it was still vibrant. And today as they look downtown the population has diminished significantly because certainly the offices are not populated. The universities are stay at home and work from home. There were so many stores that were closed that there certainly was no activity.
“And the policy of the Mayor here who has greatly impacted the circulation of the downtown roads has made it very difficult for people to even get downtown. So the Montreal market over the last 12 months has been deeply impacted by COVID and it’s really being Montreal and Toronto as the two largest markets in the country as having been closed.
“There’s so many mandated closures in those markets that there’s a lack of liquidity amongst retailers and that deeply impacts expansion plans for those retailers who want to open additional stores here.”
Retailers in Montreal are also having issues with stock and getting it from Asia. That has delayed certain top line opportunities for different retailers and it has become a major concern as people don’t know how much to order because they’re not sure how they will compare against last year’s lower levels.
“So there’s many unknowns and we haven’t been graced with many retail openings in the last 12 months in this province,” said Flanz, adding there is some growth in the retail market but not in those categories that facilitated expansion previously.
“The apparel category is not at this point expanding other than to do pop ups. Our home wear clients are doing fantastic. They’re comping up from the previous year. But the overall market is very depressed at this point. And landlords in the regional malls are becoming a lot more creative when it comes to deal terms to try and fill their spaces because there’s a lot of empty spaces now in Montreal.
“Those landlords who have open air centres have good demand. So it’s almost a dichotomy. A tale of two cities. You have the regional malls where the landlords are being incredibly creative and you have the open air centre landlords who have maintained demand.”
Flanz said it’s a tough time to be in real estate in Quebec right now because there’s not the pipeline in retail at the moment to backfill the empty spaces.
“We have clients from Europe who are now waiting for the borders to open and they’re ready to open stores in Canada and they’re targeting fourth quarter now for these openings,” he said. “I’m not permitted to mention names but we have a client base in Australia, a client base in the UK, making their Canadian market entries later this year subject to the borders opening.
“There is some good news and the more that the retail outlets are open, the better that is for the economy.”
Flanz noted that there are some “really great” residential projects in Montreal as well as The Bay’s redevelopment.
“We will have some very good successes in the mid-term which I think will really rejuvenate the downtown core but unfortunately it’s short-term pain for long-term gain.”