Vincent Chiara is the president and founder of Mach, one of Québec’s largest real estate developers and property owners.
The Montréal-based company owns and manages a diverse portfolio of office, industrial, residential and retail properties across Eastern Canada.
Chiara sat down with Green Street News to discuss the company’s recent industrial expansion, the ambitious Quartier des lumières development, and his vision for the future of commercial real estate in Québec.
Your expansion into the industrial sector marks a shift. How does this align with your strategic vision?
Our industrial portfolio today is just north of 8 million sq ft. In the last 18 months alone, we’ve built about 2 million sq ft, including a project currently under construction for BRP [Bombardier Recreational Products] on the South Shore. We’re established in different territories, including Toronto and GMA.
We’ve always aimed to keep our portfolio balanced across every asset class.
The market over the last 10 years has shown significant fluctuations, and we’ve seen industrial really explode in the last three-to-four years due to online business and the need for more specialized industrial space. A lot of the space in Montréal was outdated with 16- to 20-foot ceiling caps, whereas now we consider quality to be 30 feet and up.
Our strategy of diversification across different asset classes has served us well. We aim for balance, almost equally in every asset class, whether measured in square footage or value. Industrial is particularly important for us now, which is why we’re increasing our footprint. We bought a lot when it wasn’t the flavor of the month and paid a fraction of the value. Now it’s becoming our shining star, though it’s been leveling off in the last 12 months.
How do you envision the Quartier des lumières development reshaping Montréal’s urban landscape?
Quartier des lumières is one of three larger-scale projects we have under development. It will be 4.5 million sq ft of density. We’ll develop 2.5 million sq ft for multi-residential, with plans for 1.5 million sq ft of condos to be developed by Devimco, about 250,000 sq ft of retail space, and about half a million sq ft of office space, which includes the existing Radio-Canada tower. That tower will be the focal point of the project since it will be the tallest building on site as per city requirements. Our intention is to redevelop it as office, but that will be one of the last phases. We hope by then that office will regain investors’ interest.
When we bought that site, many people overlooked its proximity to downtown. I mentioned at the time that walking from Place Ville Marie, the core of downtown, is just 2 km away. I remember when I was younger, walking to the Forum on Ste-Catherine regularly for hockey games. This is actually a shorter distance – although the impression is that it’s longer because of the gap in between. When SNC Lavalin was built on the corner of Bleury and René-Lévesque, everyone thought it was way too east. Same with Guy Favreau on St-Urbain and Complexe Desjardins. But the gaps in between got filled, and today it’s part of the Downtown. We’ve hit the maximum growth southbound to Griffintown, so now it’s time to go east and create what will be part of the downtown skyline. With Molson across the street, this will completely change the community and Montréal’s landscape.
We’ve just started the first phase; it’s been a complicated site since the existing building has five stories underground for the Radio-Canada studios. We’re excited to develop that site. There’s a real need for rental units in the downtown core. More than just apartments, we need affordable apartments. It’s the midmarket that we need to cater to.
“We’ve hit the maximum growth southbound to Griffintown, so now it’s time to go east and create what will be part of the downtown skyline.”
How is Mach adapting its acquisition and development strategy for 2025 and beyond?
Our acquisitions, now more than ever, are based on the principle that every asset we purchase needs to have more than one plan. For example, with an office building, we ask: Can it be recycled for another purpose? With land, we question, does it have alternative uses, or is the land value itself equivalent or greater?
When we evaluate an asset, we always ensure there is a Plan B. One of our key criteria is to evaluate whether the land value under the building is equivalent or greater than the building itself – it’s about density permits and potential redevelopments.
We evaluate buildings on their capacity to generate revenue, while land is evaluated on its potential density. Often, we conclude the land is more valuable, which drives our decision to purchase the property.
We’ve been lucky in Québec because we purchase properties for a fraction of replacement values. It’s very comforting to know that if someone builds next door, it will cost them three to four times more.
Looking forward, we now understand where different asset classes are positioned in the market. We know some assets classes will suffer, so we have to carefully consider how we position our acquisitions in the office sector, for example. Land is a crucial part of our strategy – considering the possibility that office use may be locking for a long period, we need to be ready to recycle, convert, or demolish and utilize the land value.
Our acquisition strategy has to take all these possibilities and values into consideration.
“When we evaluate an asset, we always ensure there is a plan B.”
Could you elaborate on how sustainability commitments are influencing your investment decisions for 2025?
We’ve always been very sensitive about maintaining high ESG standards, and for good reasons. First, from a business perspective, there are real savings and economies in having properties with strong ESG standards – energy conservation, insulation, water management – all of these generate real cost savings. You invest, and there’s a clear payback. We’re sensitive to this, both for ourselves and our tenants. Our tenants’ standards are increasing as they require buildings with these initiatives and certifications like LEED.
Even the banks expect ESG standards for the buildings they lend on. We benefit from better interest rates when we fulfill LEED requirements versus non-LEED buildings.
Then there’s our obligation to act as good corporate citizens. The social factor – the S in ESG – is particularly important. I’m thinking about building more social housing and helping the government execute social housing projects. It would be easy for us as developers to just write a check and transfer responsibility to government to create social housing to fulfill bylaw requirements, but we need to go beyond that. It’s evident the government doesn’t have the capacity to build, so I believe developers need to build on behalf of the government. That’s the S part of ESG – it touches the people, and it touches us.
“The social factor – the S in ESG – is particularly important.”
When we fail in the S portion of ESG, when we compromise on the social piece, we risk making the same mistakes as other jurisdictions like New York, Detroit or Paris that fumbled the ball and got stuck with social issues they cannot fix. Here in Montréal, Québec, Canada – this country is about social responsibility. We’re known for taking care of people in need, and because of that, we’ve had historical social peace.
As developers, it’s important we help strengthen the S in ESG as we’re starting to see the consequences of its failure in Montréal.
Your recent retail moves suggest a strong belief in Québec’s secondary markets. What economic indicators are driving this confidence?
This surrounds our retail initiative to expand our footprint in that asset class. We’ve noticed something interesting about these regional malls, that unlike traditional malls, their fashion component is very limited. That’s where we saw a lot of uncertainty in the past.
Instead, these regional malls have become service centers, with 60 to 70% of revenue coming from pharmacies, grocery stores, Canadian Tire, banks – services we consider to be nonrisk tenants. In these regions, the mall is usually the epicenter of the city or town. Everything revolves around that center – community centers and government offices all gravitate around the main mall. Furthermore, and this also comes back to my original point about land value – these malls have huge parcels of land, and that land value derisks the investment. Even if the center needs to shift to plan B, we’re protected by the land value.
These huge parcels, mainly due to parking requirements, mean that often plan B’s are actually financially better than plan A. That’s what stimulated us to make these investments. We’ve managed to make our plan A better than expected, so plan B can stay on the shelf for quite some time while we exploit the centers for their intended retail purpose.
“These malls have huge parcels of land, and that land value derisks the investment”
Brick-and-mortar retail continues to grow. We’re seeing a revival of people coming back because of the shopping experience – retailers are beginning to understand the importance of giving clients that experience.
When I was a kid, Sports Experts stores were 5,000 sq ft: Now they’re between 50,000 to 100,000 sq ft. Why? So you can go in and live the shopping experience. You can try on a Canada Goose coat in a room set at minus 20 degrees to see the benefits, to prove the coat functions as advertised. … These are experiences you can’t live online.
Shopping is different now, and even online retail platforms are turning to brick and mortar. I’m thinking of Restoration Hardware, who only did catalogue and now is opening stores. They know that’s where they’ll see growth without detriment to their online sales, which I think will continue to grow as well.