Why are some of Montreal's shopping districts thriving while others die?

As the City of Montreal struggles to keep commercial storefronts on its biggest streets from sitting empty, one shopping district is flourishing.

Promenade Masson, a strip of stores and small businesses in Rosemont-La Petite-Patrie, has only two vacancies out of about 150 storefronts.

That's a far cry from the citywide average vacancy rate of 15 per cent. It puts to shame streets that were once the heart and soul of Montreal —  St-Denis and Ste-Catherine streets, where more than one in four storefronts now sit empty, according to a recent City of Montreal study.

Montreal has been investigating the matter for several months, and it is kicking off its public consultations Tuesday, asking citizens for their ideas on how to breathe new life into the city's once-vibrant shopping districts.

But Promenade Masson's merchants association won't be attending those consultations this week.

"We aren't participating because we don't have that problem for the moment," said the association's executive director, Kheir Djaghri.

Four to seven per cent is considered a normal vacancy rate. Promenade Masson hasn't surpassed a six per cent rate for several years now.

There are several reasons contributing to Promenade Masson's success, Djaghri said: housing in Rosemont–La Petite-Patrie is a bit cheaper than in Plateau-Mont-Royal, making it a hot spot for young families looking to buy or rent. Those residents then shop in the local stores.

But simply being well-located in a thriving neighbourhood isn't enough, he said.

The association has been offering incentives to attract both new business owners and new shoppers to the district, such as free WiFi or a free shuttle during the holidays.

Still, the booming population around the Promenade Masson plays a key role, as most shoppers are from the area, he said, and that's in line with what the city's study found — 61 per cent of customers are local. Another 24 per cent are from nearby boroughs, and only six per cent are tourists.

Vacancy rates spiking in some areas

It is a different story in neighbourhoods such as Hochelaga-Maisonneuve, where Promenade Ontario has seen its vacancy rate double to 14 per cent in the past four years. That's despite infrastructure investments by the city.

St-Denis, bogged down by road construction for several years now, has seen its vacancy rate jump seven percentage points since 2015. But that's no surprise for Hédi Battini, owner of Montek Solutions.

His electronics repair shop felt the effects of road construction that "almost killed St-Denis Street," he said.

Customers were avoiding the area, and while that's a problem, he said building owners are also making it nearly impossible to run a bricks-and-mortar location.

"It's like they're stuck 20 years, 30 years behind the times," he said. "They think that having a building on St-Denis is enough, and that businesses will rent it, no matter the cost. No, that's not the case."

Battini said he could make three times as much money by running an online store because he would save on rent and municipal taxes. The physical store has its benefits, but the cost of operating on St-Denis isn't worth it.

He'd like to see the city give new businesses tax breaks so they can set roots and grow. Jocelyne Gingras-Brunet offered the same suggestion, saying tax breaks would encourage new businesses to develop in the area.

Gingras-Brunet is the co-owner of La Binerie, an 81-year-old restaurant that moved to St-Denis Street from Mont-Royal Avenue in October.

The new location is larger, and though the strip has struggled in recent years, she said, it is "one of the nicest streets in Montreal."

As for her own shopping habits, she sticks to St-Denis rather than buying online.

 "I think it's this human contact that people have to have again," she said.

Quebec shoppers increasingly buy online

Quebec shoppers, though, are buying online more than ever before — up 27 per cent from 2017 to 2018, Montreal's study found. 

Still, retail and restaurant sectors remains a major economic driver, employing 187,000 people and account for $60 billion in sales annually.

There is no one cause behind the demise of some shopping districts, the study found.

Rising operating expenses, roadwork, changing consumer behaviours and landlords who are idle or passive when it comes to filling vacancies are among the issues highlighted by the city.

Similar issues are affecting shopping districts in cities around the world, the report says.

City aims to improve shopping districts

In June 2018, Montreal earmarked $74 million for improving the vitality of commercial corridors and supporting business development over four years.

Some city initiatives are already in play. For example, some merchants are eligible for financial assistance if their business is affected by major infrastructure work.

But the city is looking for other solutions, such as keeping close tabs on retail spaces, improving networking among stakeholders and penalizing landlords for hosting vacant storefronts. It is also considering new zoning regulations, financial incentives, and it is ready to entertain any other ideas the public presents in the coming days.

Montreal will hear from dozens of stakeholders on the matter. Among them will be the Canadian Federation of Independent Business (CFIB).

François Vincent, the CFIB's vice-president, said his organization's annual research has shown Montreal's non-residential tax rate is driving businesses out of the city.

"We think one of the keys to stopping this problem is to face the truth that the fiscality is hurting small to medium businesses in Montreal," he said.

An important step will be to collect even more data to better understand why some streets are doing so much better than others, he said.  From there, a committee could be formed to develop new programs.

No matter what happens, Vincent said the CFIB is happy that Montreal is "going to ask for propositions and solutions. That is taking on this challenge properly."