Building Magazine


Montral infrastructure overhaul does not need to be a negative for downtown business: Colliers

While downtown Montréal is entering a cycle of major infrastructure overhaul, a new study by Colliers International suggests measures for office landlords to mitigate any negative impact on the downtown office market, to maintain a low vacancy rate during this oncoming wave of unprecedented construction.

Colliers International’s Report on Montréal Infrastructure, ‘Metropolis 2.0’, examined a recent major metropolitan construction phase and found evidence that goes against conventional wisdom that extensive construction negatively impacts downtown business. The Report also suggests measures for landlords to minimize disruptions during construction.

Like many Western world metropolitan areas, Montréal is finally addressing its major infrastructure issues such as road work, waterworks, bridges and tunnels, which form the backbone of its very foundation. For Montréal, this cycle of overhaul will be one of the most important infrastructure projects undertaken in over 50 years.

The Colliers Report looked at the impact this construction will have on downtown businesses and office vacancy rates to ensure the downtown office market remains as competitive as possible.

As a historical and statistical reference, and as a major metropolitan comparison, Colliers researchers examined Boston’s Central Artery/Tunnel Project (CA/T) known as ‘The Big Dig,’ from the early 1990s to  2006. In a response to growing and crushing traffic congestion, The Big Dig re-routed the main highway through the heart of the city, Central Artery (Interstate 93), into the 5.6 km Tip O’Neill Tunnel.

During the nearly 20-year timeline of The Big Dig, Boston’s downtown office rates rose and landlords experienced a marked drop in rental rates. However, Colliers researchers found that the Big Dig was not necessarily the main contributor impacting downtown business.

“It was holes in the economy, not holes in the ground, which negatively impacted Boston’s downtown business,” said Andrew Maravita, Colliers Montréal Managing Director.

“By coincidence, two of the major economic occurrences of the last 25 years, the tech bubble bust in 2001 and the international economic financial crisis in 2008, occurred during The Big Dig and shortly after the end of the project. This taught us that bigger picture macroeconomic conditions had a greater impact on the overall health of the office market than the construction did. It was these economic factors, even more that the infrastructure overhaul, which explained the rise in vacancy rates and drop in rents experienced in Boston during this period,” he said. Indeed, few landlords in Boston would point to the Big Dig as the greatest problem that they faced at the beginning of our millenium. This being said, moving around Boston in those years was messy.

In examining similar major metropolitan infrastructure overhauls, this Colliers Report suggests to landlords some day-to-day measures to be considered to minimize business disruptions:

– Offering improved incentives to employees to promote better accessibility to public transport.

– Offering flexible building opening hours.

– Further development of building amenities.

– When and where possible, promote remote ‘work from home’ opportunities.

“This will be a time of great significance to Montréal as it transforms itself from a classic 1960’s-type metropolis to a more vibrant business and cultural centre,” said Maravita. “Montréalers will need to endure a few years of construction work with numerous infrastructure upgrades, new condo towers as well as the new Champlain Bridge, but the result will be a significant improvement in the city’s future business competitiveness.”

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