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Outaouais: From Public
Administration to High Tech

New Economy Office Users Take a Toll On Montreal's Office Market

Montreal has become a hotbed of activity for New Economy companies in such industries as telecommunications, aerospace, pharmaceuticals and software, and they've been eating up office space for the past two years in the city, according to CB Richard Ellis' Q2 2000 Office Market Index Brief. As a result, approximately 2.1 million sq. ft. (195,096 sq. ft.) of space has been occupied in the Greater Montreal area since January 1999, bringing vacancy rates down in all building classes. Class A buildings, in fact, are almost fully occupied; the market occupancy rate is 93 percent. Class B office vacancies have also fallen to 17 percent. Such activity is rapidly bringing the market's vacancy rates toward pre-recession levels. Luckily for corporate users, the rental rates have not risen as quickly. In the central core, building owners are asking between US$12 and $16 for Class A space, while Class B buildings are receiving rates of $9 to $12 per square foot. It is important to note, however, that the Berri-UQAM area's rental rates are $2 less than other downtown markets. The suburbs, on the other hand, have seen rents increase overall by approximately $3 over the last two years. Currently, Class A rental rates range between $11 and $13, depending on sector. Class B rates are in the $7 to $10 range. With only two buildings added to the inventory in the first six months of 2000, it looks as if rental rates will not be decreasing anytime soon. Phase IV of the Multimedia City in the Downtown South submarket will provide much-needed space for the New Economy businesses looking to continue growing in Montreal. The 360,000-sq.-ft. (33,445-sq.-m.) building is expected to be complete by year's end. Phases V and VI will be delivered in 2001.

Another Outaouais success story is Hemera Technologies (www.hemera.com), developers of the popular Photo Objects collection. Founded in a basement only three years ago, it is now sitting on the largest collection of photos, clip art and photo objects in the world, having acquired the Corel Graphic Corp. collection.

Hemera started by developing Netgraphics studio, a compression engine launched in 1997, whose technology then lead to the development of a first collection of 10,000 Photo Objects released in May 1998. Having developed a very strong presence on the retail market and through OEMs, Hemera is now looking into Internet delivery. "At the beginning, we had no choice but to develop an inexpensive, efficient process, which now gives us a decided edge on the competition," explains Co-Chairman and President Marc-Antoine Benglia.

Hemera is just one of the protégés of the Outaouais Economic Diversification Corp. (www.sdeo.qc.ca), which has invested $4 million in some 23 projects, most of them in IT, to help the transition of the Outaouais economy from public administration to new growth sectors.