PQ and absorption: Last and final

There were many reactions after my post on the consequences of a PQ government on the total area absorbed in a given year in the Montréal downtown district. Obviously, economic cycles affect the real estate market and we cannot accuse the PQ of causing them. What is more, the PQ, thanks to their subsidy programs, did create jobs downtown, in multimedia and information technologies… jobs that kept on being created after the liberal government election in 2003.

As of today, we notice that the market is in wait-and-see mode; it has been this way since the announcement of the September 4^th election. Furthermore, I am already hearing about rumors of international companies cancelling real estate transactions. Someone has to explain them that this minority government has its hands and feet bound.

To give some depth to my August analysis, I decided to compare Toronto and Montréal annual absorption numbers. Clearly, the two markets do not share the same size, but doing this parallel is interesting as the business climate should be about the same in both metropolises. Without data prior to 1992, we can only look at the period between 1995 and 2003.

The effect of the 1995 referendum is very clear. That year, the Montréal market froze. The upturn that followed has been really slow in Montréal, while the Toronto market was flying.

To ensure that the market stay on its current trajectory (vacancy rate downtown is at its floor rate, close to 5%: therefore, we should see some new towers in the Montréal skyline in the medium term), the elected PQ government has to stay away from an independence debate. The effects of the 2008 crisis are still felt, the Canadian economy is relatively healthy but scaring away investors and foreign companies will not help us to stay on a sustainable growth trajectory.