Cominar’s shopping malls and office towers offer long-term potential: head of Mach Group

Article content

Mach Group’s $ 1.5 billion deal to buy part of Cominar Real Estate Investment Trust is based on the firm belief that valuations of office towers and shopping centers will rebound from their pandemic-induced decline.

Article content

Montreal-based Mach is part of the consortium that agreed on Sunday to take over the Cominar company privately in a deal valued at $ 5.7 billion, including debt. Property owner and manager Canderel, who leads the group of investors, will hold such significant stakes in Cominar as the Alexis Nihon complex and Center Laval if the deal closes as planned in early 2022.

Article content

Meanwhile, the closely held Mach will inherit 42 properties from Cominar, covering some 9 million square feet of space, to increase its presence in Montreal, Ottawa, Quebec City and smaller markets like Rimouski or Thetford Mines, he said. President Vincent Chiara. Some of the best-known assets included in the deal are the Place Longueuil shopping center and the 2001 McGill College office building in downtown Montreal.

Article content

“We remain very optimistic about the markets that institutional owners are exiting, both office and retail,” Chiara told the Montreal Gazette in an interview. “We are in office, retail, industrial and multi-residence, and this is what we were looking for when it comes to diversification.”

Mach’s current properties include more than 30 million square feet of buildings and 10 million square feet of land. The company is developing more than 20 properties, including the Quartier des Lumières near the former Maison de Radio-Canada.

Article content

The shift from retail to e-commerce, a trend magnified by COVID-19, has not diminished the long-term appeal of shopping malls, Chiara insists.

“Brick and mortar retail is not disappearing,” he said. “There has been a great evolution towards online sales, but shopping is still one of the most important forms of entertainment for people. If you go to Florida, when you are not on the beach you are in the mall. Good retailers understand that they have to offer people a great shopping experience. The model will evolve. The mix has to be more exciting. “

Article content

The shopping malls of tomorrow will likely feature bank branches, supermarkets, pharmacies and new outdoor spaces, as well as residential and office buildings, said Erkan Yonder, a professor of real estate and finance at the John Molson School of Business at the University of Concord.

“There will be a transformation,” Yonder said in an interview. “The tenant base could change. Many shopping centers will be converted to mixed-use properties. “

Article content

That is why it is important that shopping centers offer possibilities for modernization, Chiara argues.

“We saw redevelopment opportunities on at least 10 to 12 assets and that really got us excited,” he said of the Cominar properties. Place Longueuil With about 340,000 square feet of the store’s leasable area, “it’s an interesting remodel job, even though the mall is doing well. There is excess land there. “

Article content

Cominar shopping centers in cities such as Trois-Rivières, Rivière-du-Loup or St-Georges-de-Beauce are also attractive due to the central role they play in their respective communities, Chiara said.

“A lot of these malls are in very captive markets,” he said. “They are usually the only show in town. The entertainment is there, the restaurants are there, the fashion is there and the groceries are there. These malls are based on a fairly large territory. “

Even after more than 18 months of telecommuting for many Quebecers, Chiara is as committed to office buildings as she is to shopping centers.

“I don’t believe in working at home. I don’t think that’s sustainable, ”said the president of Mach. “Some departments can definitely work from home and do it efficiently, but let’s face it, you can’t build a corporate culture from home. Creativity cannot be developed. Humans are social animals. “

[email protected]