By Robert Frank
Years of emphasis on condominium construction downtown have created a void in residential rental development, according to Normand Bélanger, who has found filling that gap has proved lucrative.
“People want condo-like amenities, but are unwilling to plunk down $300,000 to get it,” observed the Fonds de solidarité FTQ ceo. “That’s very interesting for developers and builders. Indeed, during the past 24 months, residential rental has dominated the most profitable transactions.”
Bélanger has fashioned a winning formula with a seven-year investment horizon.
“We develop for up to two years then spend up to five years filling the project,” he explained. “Once stable, it’s very attractive to investors who are highly liquid but unwilling to undertake the sort of risk associated with development. They will easily acquire 1,500 units at a go—and are willing to pay a premium to do so.”
Off-island also offers ample opportunity, he said. Logistics hubs in Contrecœur and Valleyfield are spurring large-scale industrial development there.
To the north is Quebec’s third-largest city, Laval, whose population and economy are growing faster than the province. It will overtake Quebec City for the number two spot within a decade or so.
Bélanger is about to start work there, together with Montoni, on a large, multi-purpose development near Laval’s big Place Bell project. It faces the Montmorency subway station and will house offices and condos and possibly a modern hotel.
The infusion of new space has softened the downtown office market, though.
“Owners will have to trim their rents to remain attractive,” Bélanger acknowledged. “However Montreal remains well-positioned. We have a newly elected mayor who is doing very good work and have a stable provincial government for the next four years.”