Cooperative municipal governments that are pro-development, a stable economy, lower land costs and underserved markets are among the reasons the Quebec City region’s retail market is strong and is attracting investment.
That’s the view of speakers at the Quebec City Real Estate Forum, held Oct. 16 at the Quebec City convention centre.
“We love this market. We want to do much more retail in this market,” said Dean Mendel, the president of Forum Group, which owns shopping centres in Quebec City and neighbouring Lévis.
Mendel said he’s attracted by Quebec City’s market stability, gap in retail offerings and affordability of sites.
“Many of the quality retailers that we see across the country haven’t yet made it to this region,” he said. “Many other quality retailers haven’t completed their coverage of this region, so there are certainly many underserved pockets in both Quebec City and Lévis.”
Mendel added there is slightly less competition in the Quebec City area than in many other metropolitan areas.
While land prices have increased substantially in recent years, there is still a small discount to be had in the region compared to most other markets in which Forum operates. In addition, low vacancy rates are resulting in increasing rental rates, he said.
BTB expanding existing mall in Lévis
Michel Léonard, CEO of BTB REIT, which owns two retail centres in Levis, noted that BTB is currently building a 43,000 square foot expansion on a parcel of excess land at its Méga Centre Rive Sud that will be delivered before Christmas to Winners.
Léonard praised the proactive nature of the cities of Lévis and Quebec City. “I wish that every mayor in the province of Quebec and even elsewhere in Canada would have a short meeting with the principals at that city because they are extremely cooperative.”
By contrast, he said, Montreal “is stuck in a rut, whereas Quebec City is a driving force as far as development is concerned and as far as being open-armed and looking at projects, as opposed to thinking that developers are just bad people that want to make money on the backs of citizens.”
For his part, Mendel said Quebec City’s municipal government is pushing Forum to do a major densification of its Méga Centre Sainte-Foy in the city’s Sainte-Foy neighbourhood. The 529,000-square-foot, open-format retail centre is located at the intersection of Autoroute 40 and Autoroute Duplessis in the western part of the city.
“The problem that we have is no vacancy and lots of demand on the retail side (and) you have to plan for these densifications over many, many years,” Mendel noted.
Mark Sinnett, executive vice-president and head of capital markets, Quebec at Avison Young, said a sign of Quebec City’s retail strength is seen in the fact the two largest retail transactions to date in the province this year have been in the city:
- Primaris REIT’s purchase from Oxford Properties of Les Galeries de la Capitale for $325 million in a transaction that includes cash, trust units and preferred units; and
- Leyad’s purchase of Méga Centre Lebourgneuf for $66.5 million from Choice REIT and OPTrust.
Jean Landry, senior vice-president, shopping centres leasing and real estate broker at Asgaard, said transactions like those along with Trudel Group’s planned $1.5 billion redevelopment of the Fleur de Lys shopping centre in Quebec City, shows that “retail is here to stay” and is “stronger than ever but with a different approach.”
Chartwell, EMD-Batimo partner on redevelopment
Speaking about seniors’ residences during the forum, Jonathan Boulakia, chief investment officer and chief legal officer of Chartwell Retirement Residences, said Chartwell is working with its Quebec development partner EMD-Batimo Group on a “massive redevelopment project” in Quebec City.
It will be built on land surrounding its Domaine de Bordeaux retirement residence in the Quebec City neighbourhood of Sillery.
The company plans to retain the heritage Domaine de Bordeaux building and build retirement residences and apartments around it. The result will be “a real gem in our portfolio,” he said.
Boulakis said he expects Chartwell to see substantial growth in Quebec City given that about 20 per cent of seniors over age 75 in the city live in retirement residences, a number that is “four times greater than the rest of Canada but on a par with the rest of Quebec, or even a little higher.”
He cited Quebec’s à la carte model in seniors’ residence in which people can choose the services they want to pay for as the main reason for this difference. It’s “a really effective model, because it lets residents come in at a more affordable level with less sticker shock when they move in, because they’re buying a base package that may not include a lot of the services that are required in the rest of Canada” where the all-inclusive model is in effect.”
Boulakis said Chartwell is looking at replicating the à la carte model elsewhere in Canada “because we’ve seen great success in Quebec.”
