Non-residential investment in the Québec City CMA
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Non-residential vacancy rate for the Québec City CMA, 2017
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$12.8B of non-residential investment for more than 265 current and upcoming (within 10 years) projects
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More and more cranes are popping up around Québec City, signalling the gradual return of major projects. In 2017, the diversity and size of ongoing construction progress generated $912.6M in non-residential investments. This represents an 11.3% increase from 2016, making Québec City's growth the second-largest within the eight major Canadian metropolitan areas, after Winnipeg (+18.4%). The return of capital expenditures aligns with provincial (+7.3%) and Canadian (+1.2%) trends. It also suggests that investments will continue to accelerate throughout 2018.
The industrial sector invested a record $129.1M in Québec City last year, representing a 67.4% annual increase. The maritime transportation and energy industries maintained their expenditures to allow for major procurement contracts. Others renovated their facilities so that they could integrate new production tools. This trend is expected to continue in 2018. Increased productivity and controlled production costs will lead to constant improvement of existing infrastructures, making more room for automation and the introduction of cutting-edge systems. Furthermore, the addition of new industrial parks will encourage businesses to increase their presence in the area. This trend was observed last year in Saint-Augustin-de-Desmaures, the Espace d’innovation Michelet and Innoparc Lévis. It is expected to continue this year as two biopharmaceutical leaders, Medicago and Endoceutics, are making huge investments to build production facilities in D’Estimauville and L’Ancienne-Lorette. There is also growing interest in land in the Espace d’innovation Chauveau as La Maison Simons will begin building its distribution centre there.
Institutional infrastructure generated expenditures of $226.6M in 2017, a 23.2% increase from the year before. Many projects were launched to renovate and add tourism, teaching and health and social services facilities in 2017. Several of these projects will continue into 2018, some of which will be picking up the pace. The Enfant-Jésus hospital expansion is one such project. While vacancy in office buildings remains high (8.5%), projects are gradually taking shape in Lebourgneuf and Sainte-Foy. Additionally, the Groupe Dallaire plans to invest a large amount in Le Phare, a major building complex in Sainte-Foy that may begin to take shape in late 2018. This real estate leader has also shown interest in developing the area around the bridge entrances on the south shore.
The commercial sector invested $556.9M in 2017, which is close to its expenditures in 2016 (-0.3%). The majority of these investments were made to renovate the major malls in Sainte-Foy and Lebourgneuf. These malls will continue on the same track to attract new retailers and fill the gaps left by the closing of a retail giant like Sears. Swedish furniture retailer IKEA will also continue its work ahead of its return to Québec City this year. Their project will help fuel the development of the Duplessis sector, which may draw new brands like French sports chain Décathlon. In addition to purely commercial projects, several large residential projects (rental and condominium) will include commercial space, which will further encourage investments in the sector.
Non-residential investments reflect businesses’ willingness to establish cutting-edge infrastructures to increase productivity, reduce operating costs and provide an attractive working environment. To that end, the return to increasing real estate expenditures in the Québec City area is a very positive sign for the regional economy. Currently, the area has more than 250 current and planned non-residential projects, valuing approximately $10.1B. The discipline and thoroughness demonstrated by the area over the past few years will be crucial to bring these major projects, as well as port and airport, public transit and heritage improvement projects, to term in 2018.