'Our commercial streets are bleeding': City hears it's just too expensive to set up shop in Montreal

When Susan Usher first set down roots in Montreal's Mile End some three decades ago, the streets were calm, rental housing was abundant, and buildings, many fallen into disrepair, were cheap.

But she fell in love with the neighbourhood's charm, and to this day, she can't imagine living anywhere else.

In 2002, Usher invested in a three-storey, brick-faced building on St-Laurent Boulevard, with a small retail space on the ground floor, two apartments above, and balconies wrapped in iron railings overlooking The Main.

Usher has watched the neighbourhood evolve into an eclectic mix of chic eateries and boutiques that are slowly pushing out the mom-and-pops — the small grocers and dry cleaners who can't afford the exorbitant rents that corporate landlords are charging.

"We've lost some of the businesses that we were all really fond of," said Usher.

Two years ago, she decided to do something about it.

She joined a neighbourhood committee that wants a thriving commercial scene in an affordable neighbourhood rich with urban essentials like bakeries, delis and dépanneurs rather than wall-to-wall businesses, like fancy restaurants and exclusive spas, that families in the area don't need.

Her committee fears Mile End will be come just as pockmarked with empty storefronts as some of the city's hardest-hit commercial strips — a fear that's shared by communities across Montreal.

Seeking the public's help

Usher was one of the first to speak last Tuesday, when Montreal opened public consultations on the empty storefront problem.

With the average retail vacancy rate hitting 15 per cent, and with some commercial streets at nearly double that, the city is eager to hear the public's ideas.

So far, two issues have come up time and again: Montreal's steep commercial tax rate and the excessive rents property management firms are demanding.

Suggestions include simplifying the way buildings are evaluated or offering educational classes to help business owners navigate taxes that feel especially unfair to landlords like Usher, with her single storefront space.

The way the system works, she is in the same high tax bracket as corporate landlords.

"Our taxes have gone up from about $2,500 a year to more than $10,000 a year," she said.

"The evaluation of our building has gone up 175 per cent between 2005 and today, whereas the amount of rent we charge in the commercial space has only gone up 35 per cent."

The Mile End committee's brief to the city last week suggested the city redefine those tax brackets.

Usher suggested factoring in elements such as how long somebody has owned a building, or the original purchase price, to avoid placing individual owners like her in the same bracket as firms that are charging commercial tenants five times the rent that she charges.

Lower commercial taxes, CFIB says

Either way, commercial taxes are out of control, according to Gopinath Jeyabalaratnam.

Jeyabalaratnam, an economic affairs adviser at the Canadian Federation of Independent Business (CFIB), told CBC's Let's Go that commercial taxes are four times higher than residential taxes. As well, under the current model, those in high-value areas like downtown pay much more than those on the outskirts of the city.

"Our commercial streets are bleeding, and we have to stop the hemorrhaging because otherwise, we might be putting a lot more effort and a lot more money to get back to a normal situation," he said.

But taxes aren't the only problem. Corporate landlords can afford to buy up bushels of buildings in an area, raise the rent and then wait for the next big franchise to move in. People like Usher can't afford to leave her commercial space empty for months, so she charges less rent to keep her storefront occupied.

Her tenant, Robert Sutcliffe, said he searched the neighbourhood for four months for an affordable place to open Art et Son, a shop specializing in retro home stereo systems.

The vacant commercial spaces owned by corporate landlords would have cost him thousands more, so he felt lucky to discover Usher's storefront.

"This one fit the bill perfectly for what I was looking for," he said. Still, he'd like to see fewer vacancies on the street to attract more shoppers to the area.

Usher is among those calling on the city to levy fines against landlords who leave commercial space empty.

She said those fines should be aimed at landlords who have raised the rent more than 50 per cent and have left a space vacant for more than six months.

Architect calls for flexibility

Montreal architect Ron Rayside would also like to see landlords penalized for failing to fill vacancies because, he told the city commission, lowering rents is a sure way to attract a tenant.

Rayside, who owns a couple of retail spaces himself, is a partner in a firm located on a commercial strip on Ontario Street East.

He's always managed to keep his commercial space filled by keeping rents low, he said. Once he even dropped the rent down to a mere $100 per month, offering a local artist a short-term lease to help him get his business off the ground.

The deal ensured the unit was maintained, secure and not just another vacancy in Mercier-Hochelaga-Maisonneuve, he said.

There are creative ways like that to keep retail space occupied if landlords are motivated to do so, Rayside said. And it might take penalties to create that motivation.

But the city needs to do its part, as well, he said. He suggested more flexible zoning regulations that would allow property owners to be more creative with their properties.

The Montreal youth council made a similar suggestion, saying it would like to see empty storefronts put to use with temporary occupation permits.

"You could even have other, non-residential uses that are not commercial, per se, even temporary spaces — whether it be for artists or other uses," Rayside said.

"Once we decide from a social point of view and a commercial and city point of view that vacant commercial spaces are really bad for the commercial artery or bad for the dynamic of a neighbourhood, then there are all kinds of different ways to solve it."