Real Estate Talk:
Westmount retail
The state of Westmount retail and where it’s going
By Joseph Marovitch
Montreal has a 15% to 20% vacancy rate of street level retail spaces due to high non-residential business tax. In Westmount, turnover of retail space is high due to high tax and high rents. This is a problem for business owners but apparently not for real estate investors. Investors are finding opportunities to purchase commercial property in Westmount and Montreal, whether the property is providing income or not.
The idea is property values will continue to rise across the city so a buy and hold mentality is in play. In five to ten years from now, when space to build is extremely limited and a re-seller market takes over, prices will sky rocket and buyers will be wealthy local investors, and international investors searching for a safe place to park their money and experience a capitol gain as the price of the property rises.
Considering the rents landlords are asking for retail space in Westmount, they seem to have the same buy and hold mentality. It appears that certain landlords of retail space on Sherbrooke, Victoria and Greene Avenue are pleased to charge high rents with no concern as to turnover.
The idea is property values will continue to rise across the city so a buy and hold mentality is in play.
For a business to thrive it must have room to grow, meaning rents should start low in the first and second year and then gradually increase. If the lessee is to create a solid client base, they require funds for fixturing (set up of the store), advertising and marketing at start-up. With support from the landlord, the business will get established and eventually grow.
One would think landlords want lessees that are successful, that grow and expand, but this does not seem to be the case. Westmount lessors are asking $50 to $75 or more per square foot plus business tax, operating expenses and utilities. This is the same amount lessees are paying in downtown Montreal with much higher traffic.
For Westmount retail to thrive and grow today, rents must be adjusted for business owners to have a chance to succeed. However, the long term is also rosy for those with money. Those investors who are purchasing commercial property today know that in a few years the city will be catering to the wealthy, at which time retail will make a strong comeback. It would however be good if we could all grow and succeed together!
For Westmount retail to thrive and grow today, rents must be adjusted for business owners to have a chance to succeed.
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Have a great week!
Next article: Q & A conversation with Joseph – past real estate questions answered
If you have questions, send them in before next Tuesday and I will include them in the next article
State of the market
According to the Quebec Professional Association of Real Estate Brokers (QPAREB), Montreal real estate will experience record high sales growth in the coming year. The QPAREB states that Montreal has experienced its fifth consecutive annual increase in sales with an average increase of 6.9%. Other areas that experienced gains were Saint- Jean-sur-Richelieu, the South Shore, North shore, Laval and Vaudreuil-Soulanges.
‘The QPAREB states that Montreal has experienced its fifth consecutive annual increase in sales with an average increase of 6.9%.’
Reasons stated for the gains are continuous population growth however, again, I would put forth the following reasons: stable economy, low interest rates, increased household disposable income and decreasing space for new construction on the island of Montreal causing prices to rise both in Montreal and off-island suburbs where opportunities are increasing daily. All of which is attracting more and more foreign investors.
Read also: Other articles by Joseph Marovitch
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible to, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or josephmarovitch@gmail.com
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