Technology: High rents are driving businesses out of Montreal's neighbourhoods. What can be done? - PressFrom - Canada

TechnologyHigh rents are driving businesses out of Montreal's neighbourhoods. What can be done?

12:02  12 july  2019
12:02  12 july  2019 Source:

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The trendiest neighbourhood in the city is now lined with boarded-up commercial buildings defaced by graffiti, their windows covered in tattered posters for bygone events.

It's a stark contrast to the not-so-distant past, when Montreal's Mile End was profiled in the travel sections of foreign magazines and online sites as the hippest place in Canada — a must-see location. Couples took their engagement photos in front of the bird cages hanging off the second-storey balcony in front of Dragon Flowers, a Bernard Avenue flower shop.

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But more and more of the family restaurants, chic cafés and clothing shops that drew people to the trendy Plateau neighbourhood in the first place are closing up shop.

Earlier this month, Patisserie Chez De Gaulle, a pastry shop on St-Viateur Street, announced it was closing after its landlord more than tripled the monthly rent.

In 2018, Chez De Gaulle's neighbour, the eclectic vegetarian restaurant Le Cagibi also went out of business due to exorbitant rent hikes.

And it's not just in Mile End: merchants across the city are suffering the same fate, blaming greedy landlords for essentially kneecapping them, forcing them out of business even if they're doing well.

The unchecked rent hikes and resulting closures have sent a chill through Montreal's business community — and some are advocating for the same kind of protection for commercial tenants that Quebec gives residential tenants.

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After another case of vandalism and looting on the weekend, Montreal business owners, politicians and community activists are reflecting on the stresses an influx of new businesses and high -priced condos are placing on the city' s St-Henri neighbourhood .

Right now, there is nothing legally preventing commercial property owners from jacking the rent exponentially when a lease expires.

"It's the wild west right now," said Glenn Castanheira, a business consultant.  "There is literally no regulation to protect commercial tenants from any abuse."

He says if the problem goes unchecked, small businesses across the city could be crippled.

Vacancy by design

Castanheira says some landlords are buying property on speculation and simply leaving their storefronts empty, waiting for the building's value to rise.

They hike the rent in the hope of eventually finding a tenant willing to pay big dollars to set up shop — while simultaneously holding the asset while its value rises, ensuring they make money whether or not they collect any commercial rent.

"What we're seeing is more and more vacant properties, vacant shops that are voluntarily maintained vacant for speculation purposes," said Castanheira.

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While it's perfectly legal to leave a building empty, letting buildings fall into disrepair can cause blight. It can also push long-established "mom and pop" stores out of the communities they've served for generations.

Landlords are not obliged to make sure their vacant storefronts are tidy. As a result, as some get covered with graffiti or posters, there's a ripple effect. Neighbouring businesses get less foot traffic, since the street begins to look unkempt.

'It's the wild west right now.' - Business consultant Glenn Castanheira

Nick Kirschner, who owns a couple of Montreal bike shops and a record shop on Bernard Avenue, says he's seen the effect of blight first-hand.

Kirschner says foot traffic is already down significantly on Bernard.

"It escalated extremely quickly," said Kirschner. "The changes don't feel year-to-year anymore. It feels like it's much faster than that."

Kirschner considers himself lucky, because he has faith that his landlords will not increase his rent to levels he's unable to afford. But he knows that they could.

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As high rents shutter longtime businesses , they also create an ever- higher barrier to entry for new Locally owned businesses also sustain much of the social fabric of neighborhoods , and recent Similar incentives, driven by how buildings are financed, also lead property owners to favor chains.

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He wants to see new regulations that would protect small business owners from being priced out of their own locations.

"Small business owners are working around the clock to make their businesses work," he said. "It doesn't make sense for them to be open to the liability of having to completely change their business model at the drop of a hat."

High rents are driving businesses out of Montreal's neighbourhoods. What can be done?© Kate McKenna/CBC Business consultant Glenn Castanheira says the city and province need to provide additional protection for merchants quickly, to keep vacancy rates from increasing in neighbourhoods like Mile End.

What can be done?

Kirschner would like to see the creation of some sort of commercial rent control that would limit the percentage by which landlords could raise the rent.

"I think it's essential," he said. "There's got to be something done."

Castanheira believes rent control is a heavy-handed approach which risks stagnating the market and preventing up-and-coming new shops from opening in burgeoning neighbourhoods.

He recommends looking to cities like Chicago for solutions.

Chicago nudges landlords into filling their vacant storefronts by fining them if they are left vacant for too long.

It also requires landlords to maintain their properties, inspecting the buildings on a regular basis.

Castanheira would also like to see the province create regulations governing what must be included in leases.

He'd like to see renewal clauses made mandatory and other protection for commercial tenants, such as limits to what landlords are allowed to make tenants pay for. For instance, maintaining a roof should always be the landlord's responsibility, he said.

City seeks solutions

Plateau-Mont-Royal borough Coun. Marie Plourde said the city is planning on addressing the issue of vacant properties head on.

She said Montreal's economic development committee is already discussing solutions, including possibly charging commercial property owners for storefronts left vacant.

However, she says it's a sensitive issue and one that must be considered carefully, since sometimes it takes time for a landlord to find an appropriate tenant.

"We don't want to penalize all the small owners," she said. "We have to find the right balance."

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