Ian Quint is the founder and president of Brasswater, one of eastern Canada’s biggest commercial real estate players.
The Montréal-based company owns industrial, office and retail properties, with more than $2.3bn of assets.
Quint sat down with Green Street News to discuss Brasswater’s investment strategy, the evolution of commercial real estate markets, and his outlook for commercial real estate in the Greater Montréal Area.
What are the key elements of Brasswater’s strategy?
We’re primarily focused on acquisitions, but our strategy is straightforward. We don’t set arbitrary goals about becoming the largest or acquiring a specific amount of square footage.
If we find 100 good deals in a year, we’ll do those deals. If we find zero deals for 10 years, we’ll do zero. Our organizational structure doesn’t require us to do deals just to generate fees.
“We buy properties primarily for ourselves rather than syndicating with numerous investors”
What makes us different is our opportunistic approach and alignment with our partners. Unlike other real estate developers or owners, we buy properties primarily for ourselves rather than syndicating with numerous investors.
We own most of our properties outright. Our profit comes from the actual success of our real estate investments, not from charging fees to investors.
How does Brasswater view the challenges in Montréal’s current distressed economic climate?
Every economic environment generates different types of opportunities, so we don’t see a distressed market as a challenge. The main challenge today is actually with vendors who are holding firm on their prices – prices that reflect yesterday’s market, not current conditions.
There’s a significant gap between asking prices and what buyers are willing to pay. As a privately owned and active company, we have an advantage because we don’t rely solely on deals through brokers. We’re able to find off-market deals at current market prices.
What is your assessment of Montréal’s office market and its outlook?
The office market is highly segmented, making it impossible to give a broad answer. There are significant differences between quality office space downtown versus B and C class properties, and between downtown and suburban locations. Some suburban markets, like Laval, are very strong, while others, like St-Laurent, are quite weak. Each submarket needs to be analyzed individually.
The flight-to-quality trend that emerged after the pandemic is very real. Class B and C buildings face significant challenges – their vacancy rates will likely increase.
While residential conversion is often suggested as a solution, it’s really only viable for about 10% of properties due to construction challenges, zoning restrictions and structural factors. It’s not a universal solution but rather one that works for specific buildings.
How is Montréal’s industrial real estate market adapting, and what effects do you see on the retail market?
The industrial market has definitely softened from its pandemic heights. We’ve seen rental rates shift from a landlord to a tenant market and building values have decreased due to dramatically increased cap rates, driven by interest rates and uncertainty.
The impact of online shopping on distribution spaces has been minimal outside of Amazon and last-mile facilities. Interestingly, retail has been thriving, particularly service-oriented retail. This success is due to limited supply – very few retail spaces were built in the last five to 10 years, while population continued to grow.
This has created favorable conditions for landlords, with grocery anchors in expansion mode and finally willing to pay competitive market rates.
How do you see Montréal’s retail and industrial sectors evolving?
Despite early pandemic predictions, retail has proven to be remarkably resilient. It’s evolved into two distinct categories: service-oriented retail (including grocery stores, pharmacies, gyms and restaurants), which is flourishing, while traditional fashion-centered retail faces more challenges. The limited supply of retail space, combined with consumers’ persistent desire for in-person shopping experiences, has maintained the sector’s strength.
“Everything in real estate is cyclical, and there’s always light at the end of the tunnel if you approach it strategically”
In the industrial sector, while we’re currently seeing some challenges with larger spaces (100,000 to 500,000 square feet) becoming available and fewer potential users, we maintain a long-term positive outlook. Even though companies that expanded during the pandemic are now reducing their footprint, we believe this is cyclical.
With new supply decreasing, we expect vacancies will eventually be absorbed. The key is to buy responsibly and maintain confidence in the asset class over time. Everything in real estate is cyclical, and there’s always light at the end of the tunnel if you approach it strategically.
