Apartment vacancies are rising
Apartment vacancies are rising in Montreal but, contrarily to market theory, rents are not falling.
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bob 15:25 on 2024-12-18 Permalink
That theory is for a free market, not for a corrupt one.
Blork 16:21 on 2024-12-18 Permalink
Doesn’t it take a while for those ripple effects to be felt? It’s not like landlords will just lower people’s rent in the middle of the lease just because the Market Fairy has sent a memo about supply. It takes time. (Also, obviously there are many other factors; just “supply and demand” is a bit over-simplified.)
Blork 16:25 on 2024-12-18 Permalink
…although the rent numbers cited in the article seems to be for new construction only. But still, those projects were built based on projections from a few years ago, so it still takes time for new construction rentals to respond to the change in supply.
Mozai 19:39 on 2024-12-18 Permalink
If the goods were commodities, where it doesnt matter if which pound of flax you purchase, and you can easily switch between which pounds of flax you hold, then price and supply would be connected.
Mark Côté 14:19 on 2024-12-19 Permalink
Lots of commercial landlords in NDG (and I imagine elsewhere in Montreal) seem to be content to just let their buildings stay mostly or entirely unoccupied rather than lower rents. It boggles my mind… I just can’t understand how the math works out in their favour when a building is vacant for years.
(I know this has been brought up here before but I still can’t wrap my head around the reasoning.)
Kate 16:54 on 2024-12-19 Permalink
Maybe they feel that property values will rise anyway, without the hassle of a tenant. That’s to ignore how buildings deteriorate over time if not occupied, mind you.
Ian 18:44 on 2024-12-19 Permalink
Presuming you own multiple properties, a loss on one can be declared against profit on others, lowering your tax bill – so it works out to your advantage in the short term. The main strategy is to do that while waiting for either a good tenant, a good development opportunity, or a good sale price. Of course it’s tricky as if you wait too long the building becomes a liability in a sale scenario, but sometimes it works out in the long run – see the Overdale site which was a bunch of low-rent properties, sat vacant for 30 years, and is now an insanely profitable tower. This is not a short grift.
I think what confuses a lot of people is that a loss on an empty building can be a good long-term strategy when leveraged against the rest of a profitable real estate portfolio as it represents a tax break, maybe even more than the profit you would get from shitty tenants and having to maintain a second rate property.
Joey 10:47 on 2024-12-20 Permalink
I am reminded of the limits of market-based solutions every time I pass by the abandoned hotel structure at the corner of Laurier and Esplanade. You couldn’t ask for a better location for a boutique hotel or swanky condos. And yet the thing never got built and just sits there. Surely in an overheated real estate market there’s money to be made. I think someone here mentioned some rumblings that changes were afoot, any word on that?
Ian 19:10 on 2024-12-21 Permalink
I noticed that most of the Shiller-Lavy properties on Saint Viateur are now up for sale via Collier’s. Perhaps related?