Manufacturing SMEs are facing significant rent increases these days.
Edgar Belleau is president of Instacable Computer Cables, a manufacturer of cable harnesses for the telecom sector with 14 employees. Housed at 2800, rue Joseph-A.-Bombardier, in the A440 sector, near the A13 in Laval, the 63-year-old man pays $7.50 in rent per square foot. His lease expires next July.
Its owner Pure Reit, which belongs to the American Blackstone and the Caisse de depot, is now asking for triple that, or $23.50.
In an interview, Mr. Belleau says he is looking for a 40% smaller room in the northern crown, in order to minimize the bill.
Mr. Belleau’s case, which was first made public by the Montreal Journalis far from unique, according to the words of Bruce Cowper, managing partner of Cresa, a real estate agency specializing in tenant representation.
“In a transaction that I have just concluded, he says, the rent was around $6 net [le pied carré], an amount that had been fixed for five years. At the end of the term, due to a lack of options, the customer renewed his lease despite a 300% increase in net rent with annual indexations varying from 3% to 5%. For me, this is very new behavior on the part of the owners. »
“I imagine that companies find it very difficult, continues the experienced broker. In my opinion, there will certainly be people who will close up shop since they will be unable to support these levels of rent. »
At 4e quarter of 2022, the net asking rent was $14.56 per square foot on average in the Montreal area, according to the market study carried out by the Cresa agency. The availability rate for industrial premises was only 1.1%.
“I expect market conditions to remain the same in 2023 [en dépit de la hausse des taux d’intérêt] because the availability of premises remains rare. It will remain difficult for the tenants, ”believes Bruce Cowper.
Prestigious award for Ivanhoé Cambridge
The Caisse de depot did not make much of it, but the president and chief executive of its real estate subsidiary, Nathalie Palladitcheff, received the prestigious career prize from the specialized publication PERE (for Private Equity Real Estate) in early March.
“I’m carrying the prize, but it’s obviously all of Ivanhoé Cambridge and the Caisse that are behind it. I’m just the ambassador. But it is obviously a matter of pride. I am particularly proud because this is the first time that a Canadian has won this award,” says Ms.me Palladitcheff in an interview with The Press. Of French origin, the CEO obtained her Canadian citizenship 18 months ago.
PHOTO FRANÇOIS ROY, LA PRESSE ARCHIVES
President and CEO of Ivanhoé Cambridge, Nathalie Palladitcheff
This prize is awarded after consultation with the main leaders of the largest real estate investors on the planet.
This award highlights the work of repositioning the Ivanhoé Cambridge portfolio, undertaken by Ms.me Palladitcheff upon his arrival at the head of the organization.
“When I was appointed, she explains, we had as asset categories, in order, shopping centres, offices, residential and logistics. Today, it is exactly the opposite. »
Shopping malls are in decline with the rise of e-commerce.
Ivanhoé, under the orders of Mr.me Palladitcheff, has also decided to focus on its role as an investor and to cease acting as a vertically integrated real estate operating company. Ivanhoé has thus outsourced the management of its Canadian shopping centers to the American JLL. About 330 employees left Ivanhoé for a new employer.
This was a bold move since Ivanhoé was turning its back on its origins, the company having been active in the operation of shopping centers since its founding in 1954 by grocer Sam Steinberg.
“I think what’s recognized through this award is the fact that we’ve been pretty forward-thinking in our ability to move before it’s too late,” she said. There are many of our peers who see that the choices we have made, whether on the construction of the portfolio, the business model or our commitments in terms of ESG and diversity, are choices that are paying off. . »
The subsidiary delivered a return of 12.4% in 2022 despite the rise in interest rates, which are usually harmful to the real estate sector. At the same time, the real estate sub-index of the S&P 500 fell -26% last year, while that of the Toronto Stock Exchange (S&P/TSX Composite Real Estate Index) obtained -1.5%.
Ivanhoé Cambridge’s return had been +12.1% in 2021 and -15.6%, during the first full year of Mme Palladitcheff at its head.
Montreal: improvements required to the home ownership program
Since 2018, the City of Montreal has offered financial support to first-time buyers. The budget allocated for this purpose is not fully used. The official opposition will table a motion at the next municipal council to optimize the program.
The opposition is calling for the program to set a cap on eligible household incomes based on a sliding scale approach. Less aid would be granted from a certain threshold to disappear completely at a higher level of income.
“The administration is giving subsidies even to buyers with strong backs for whom the housing affordability crisis is not an issue. “, deplores Councilor Julien Hénault-Ratelle, official opposition spokesperson for economic development.
In return, the elected representative of Ensemble Montréal wants the program to grant additional assistance to single-parent households, which are often less well-off than two-parent households.
Finally, the councilors elected under the banner of the Ensemble Montréal party recommend increasing from 5 to 7 years the period of monitoring compliance with the conditions of the program without having to increase the budget provided for this purpose. About 12% of cases audited do not meet the program’s eligibility criteria, said the councilor for the district of Tétreaultville.
PHOTO DOMINICK GRAVEL, THE PRESS
Maestria condos in downtown Montreal
The program pays up to $15,000 towards the purchase of a new property of at least $610,000 in the city center for a family with children. This amount is $10,000 outside the city center for a property with a maximum value of $540,000. For an existing property of $725,000 or less, assistance varies from $5,000 to $7,000.
On the side of the cabinet of the executive committee, it is said to be in the process of analyzing the opposition’s proposal and seeing the impacts that various changes to the criteria could have on the achievement of the program’s objectives.