The Chamber of Commerce of Metropolitan Montreal has released a new study entitled Reviving downtown Montreal in a profoundly changing environment – Strategies for taking advantage of new ways of organizing the work and consumption in the city center, as part of the “I like working downtown” initiative, supported by the Quebec Ministry of Economy and Innovation.
Michel Leblanc, President and CEO of the Chamber, said the recent lifting of the recommendation for compulsory teleworking will trigger the gradual return of downtown workers to hybrid mode.
“This is good news, especially for merchants in the sector, who have suffered enormously from the drop in traffic over the past two years. The study . . . specifies, however, that changes in work organization methods will have a persistent negative impact on traffic and the level of consumer spending in the zone. According to our estimates, the number of workers present daily in the city centre next fall will be 19 per cent to 25 per cent lower than its pre-pandemic level. The fall in the level of expenditure will also be very significant – around 14 per cent. It’s a major shock,” said Leblanc.
“The Chamber’s study proposes solutions to reduce this shock in the short term and thus limit the risk of a breakdown in the commercial fabric. We propose a series of actions that will improve the experience of the city centre. In a hybrid model context, a face-to-face day would become a sort of local mini ‘business trip’, where workers’ consumption habits that were previously spread out over the rest of the week would be concentrated. The goal is to encourage behaviours that help maintain a good level of traffic in our businesses, restaurants and cultural establishments. Longer term, we remain optimistic. The reduction in the number of short-term workers will gradually be compensated by economic momentum and business growth.”
The study identified four major areas to guide recommendations aimed at strengthening the city centre and making it a more diversified, resilient and accessible economic hub:
- Facilitate the transition to new work organization models;
- Enhance the downtown experience and promote a mix of uses;
- Contribute to informed decision-making in private investment; and
- Position the city centre as a strategic sector that contributes to the international influence of the metropolis.
Leblanc said after a few months into the pandemic the organization launched an initiative to get prepared for the eventual relaunch of the economy to make sure it understood collectively what would be the challenges.
“The idea right from the outset was that contrary to the usual situation where you have a recession it’s as if the tide went down and the tide going up and all the boats going up at the same time, initially we really understood that this would be different,” he said.
“That would be economic sectors where the pandemic would be almost a positive outcome for them and that they would grow like the IT sector and certain areas of the economy. And we anticipated of course that other sectors would find it very difficult like the tourism industry.
“As we moved along, we realized the downtown area was going to be hard hit for a long time and we started to consider the downtown as an economic sector in and of itself.”
About a year ago, the Chamber received financial support from the provincial government to launch a series of initiatives to try and re-launch the downtown. The idea was to be ready as soon as the government relaxed certain public health measures. In the fall, the Chamber launched a public communications campaign, trying to entice workers to come back. Best practice committees included employers and owners of buildings to make sure everything needed to be done would be done. That included a plan of bringing back the employees.
Leblanc said the Chamber launched some projects to transform the experience of coming downtown. Those projects were in private or semi-private places like lobbies of towers, food courts, the underground system and outside areas belonging to private ownership.
“The idea there was that the city itself would finance initiatives on the public space and we would add creative projects on the private spaces and we would communicate to the employees coming to work that downtown is great. You’re going to see new things. You’re going to feel new experiences.”
Leblanc said some people have been saying that downtowns are finished because of the pandemic and the changes in how workplaces operate with a new remote work or hybrid model.
“A structural drop of 19 to 25 per cent is a big drop but at the same time it’s not at all the end of downtown,” he said. “When we ask companies what are your views for future years, the economy here is very strong so even if they say initially we’ll have less people coming, as we will grow, we will grow our workforce as well. Eventually numbers will resume going up,” he said.
Also, he said while there is an anticipated drop in the number of office workers coming to work, the Chamber at the same time anticipates less of a decrease in the amount of spending because people will simply concentrate on fewer days what they would have otherwise spent on coming out for five days.
Jeff Berkowitz, President of Aurora Realty Consultants in Montreal, said the biggest issue these days, and into the future, is the amount of construction taking place in the downtown, which is disruptive.
“The downtown needs revival but it also needs protection of the ongoing street work that they’re doing in the downtown core. So many things. COVID took a major hit obviously. We’ve lost all the tourists. We’ve lost all the office traffic that you have normally. But on top of that we’re in the midst of a long-delayed complete dig up of St. Catherine Street – the main street – as well as McGill College (Avenue) and Peel Street, which are two of the main cross streets on St. Catherine, getting their entire infrastructure redone,” said Berkowitz.
“So that is actually now the more concerning issue is to how long that’s going to continue to go and how disruptive will it be for the downtown core retail.
“St. Catherine at this point probably has three to four years at the pace that they’re going. In various parts. They do it block by block. I don’t want to sound completely negative because we have seen a lot of activity and demand from retailers. Some expanding in the market and some new to the market completely that are looking at Montreal. So there is interest in the market.”
Berkowitz said many retailers, who have entered the Toronto and Vancouver markets, are looking at Montreal now because of its population mass and it’s a logical expansion for them.
“It’s rare that the first stores in Canada are in Montreal, usually they go to Toronto, Vancouver and some of the other markets first, but there’s been a fair number of those that have come through, they just got stopped in their expansion because of COVID. Now it’s time for Montreal and things are picking up again.”
The return of office workers will have a positive impact on Montreal’s downtown retail sector, he said, adding traffic has also increased due to students being back in school.
“What we are missing is that sweet spot which is the tourists and that’s a ways to go, but I definitely think the re-populating of the daytime, especially for food and beverage, will make a big difference,” said Berkowitz.
“If you want to keep it vibrant, it’s got to be a multi-use destination. It’s got to be live, work, play. You’ve got to have elements of everything. And the more you have residents in the downtown core, the more you get that neighbourhood feel and constant traffic, the more you’re drawing your tourists, or people who are there multiple times a week, the more alive your downtown core feels.”
Tony Flanz, President of Montreal-based Think Retail, which consults and represents international, national, and regional retail chains, said the downtown retail sector was hit particularly hard during the pandemic like other major cities. Offices were not populated and universities were closed for some time.
“It took a great toll on traffic on St. Catherine Street and some of the adjacent side streets to the point where there was little if any people walking around for the better part of a year and a half,” said Flanz. “Somewhat like a ghost town.
“There’s a lot of great news now that’s taken place over the last few months. It started with the universities reopening for in-person classes. That started to bring some of the people back. And all of a sudden downtown looked very young. The stores were getting a little more populated.
“That was the first real boost to business in the downtown core in quite some time. It was very welcomed and it was very noticeable. And all of a sudden retailers started to claw back a little bit of sales that had been missing during the pandemic.”
Now with the removal of all in-store capacity restrictions, the mood is incredibly positive. With more offices coming back, that is increasing traffic in the downtown core.
“For the first time in two years, there’s quite a few major international companies looking to open downtown and that itself is a big change and one that’s so welcome for our client landlords who have been waiting for good news. You have the Nike’s who have been rumoured to have finalized a very large flagship deal on the street. Lucid, the e-car company, has been actively pursuing a location in the downtown core.”