The good landlord: how collective commercial real estate strengthens local economies

In 2021, PME MTL Centre-Est — one of Montreal’s six local business development hubs — spent nine months raising $22 million to acquire an old pasta factory.

The building, found at 305 rue de Bellechasse,  covered more than 82,000 square feet and had long been home to artists and creative workers.

The plan was to transform it into a collective real estate project, with PME MTL Centre-Est among the main owners. A workers’ fund and the Ministry of Culture were among the partners solicited.

The missed opportunity that became a Montreal turning point 

Today, the building houses office lofts, and the artists are gone. PME MTL Centre-Est’s financing fell $1.5 million short of what was needed to close the deal, said Myriam Lamouni, project manager for commercial and industrial real estate at PME MTL Centre-Est.

It proved to be a turning point.

“The central administration did not want another lost opportunity like this one,” said Lamouni.

“We must keep artists, small retailers, independent businesses and social economy organizations in central districts. But the more successful these tenants become, the higher rents rise — so they leave, and the district loses its vitality.”

The B.C.-based independent business network LOCO BC has drawn a similar conclusion.

Its recent report, Supporting Commercial Affordability & Local Business, highlights how new housing policies and intensified redevelopment — while urgently needed — risk accelerating the displacement of local businesses unless commercial affordability is deliberately built into the plan.

Real estate is a problem — but it may also be part of the solution.

LOCO BC’s research presents dozens of strategies for making commercial space more affordable, and collective real estate ownership is among the most promising.

Montreal is now moving in that direction.

The City mandated PME MTL Centre-Est to develop a collective commercial real estate model to strengthen local economic resilience. That mandate led to the creation of Pallier, a non-profit organization dedicated to acquiring commercial and industrial properties and keeping them affordable for tenants over the long term.

Montreal residents and longtime friends Marc-André Robertson and Émilie Therrien founded a parallel non-profit, HocheLab, with the same core mission — and it is among the case studies that LOCO BC has documented in its research.

Marc-André Robertson, cofounder, HocheLab (supplied)

“We saw financing flowing toward new construction, which is essential,” said Robertson. “But what about existing buildings? Many owners are about to retire and sell. What happens to the tenants?”

The cross-subsidy strategy: Montreal, Toronto and Vancouver examples

Pallier is acquiring large industrial buildings — generally more than 20,000 square feet — in whole or in part, and intends to cluster tenants from the same industry in each one.

“They will be ecosystems where tenants can network, create synergies and generate opportunities,” said Lamouni.

The formula combines private companies, social economy organizations and community groups, with a sliding rent scale.

The food sector is one of Pallier’s priority industries, said Lamouni.

“We identified a financially strong private company looking for 20,000 square feet,” she said. 

“These entrepreneurs are willing to pay a rent premium to be part of an ecosystem and have access to shared specialized equipment.”

That rent premium helps Pallier reduce costs for other, less financially robust tenants in the same building. The stronger anchor company also provides the bank with the guarantees needed to secure financing.

Toronto’s Daniels Corporation deployed a similar cross-subsidy logic during the revitalization of Regent Park. The challenge there was different — not retaining businesses, but attracting them to a neighbourhood that had almost no formal commercial spaces.

Through its Social Impact Commercial program, launched in 2018, Daniels offered artists, entrepreneurs and not-for-profit organizations studio and commercial space at below-market lease rates. 

Rents from national brand tenants funded the flexibility extended to others, creating financial stability across the portfolio.

In B.C., the Community Impact Real Estate (CIRES) takes a similar approach. Operating as a sub-landlord for spaces within BC Housing’s portfolio, CIRES manages 53 commercial units across 29 buildings — most of them mixed-use properties combining commercial ground-floor spaces with social housing above. About half the units are leased at below-market rates.

Tenants who receive a rent reduction must sign a Social Benefit Covenant, committing to hire and source locally and to make their goods or services available to community members at reduced cost.

The rent discount isn’t a traditional subsidy; it’s offset by a measurable community contribution. In 2024, tenants operating under these covenants collectively delivered close to $500,000 in goods and services to their surrounding neighbourhoods — a social return that reframes affordability as an exchange rather than a concession.

HocheLab drew direct inspiration from CIRES’s model. “We must own enough buildings to spread rents across a significant number of tenants with different paying capacities,” said Robertson.

Pallier takes a complementary path: acquiring a small number of large multi-tenant buildings, each anchored by at least one financially stronger occupant.

Social financial engineering

“We are doing social financial engineering,” said Robertson.

“There is no playbook,” added Lamouni. “Each collective real estate project requires its own financing structure — a different stack of capital every time.”

She illustrates the contrast between a food-sector project and a cultural-sector one.

“For food, investors examine each tenant’s business plan and decide whether the returns justify the investment. In the cultural sector, tenants tend to be more financially fragile. We might bring in a larger company as a co-owner of the building, which sublets units to others. The risk is shared — the co-owner helps fill the building.”

That flexibility has opened unexpected doors. A biotech entrepreneur recently approached Pallier about partnering to acquire a building and share space and equipment with other businesses. 

“Turned out this entrepreneur has a brother working for a Toronto foundation,” said Lamouni. This connection led to a conversation about strategies to ensure the affordability of commercial real estate in Canada — and potential collaboration.

Pallier is also in discussion with New Market Funds, a community real estate developer and multi-fund manager with offices in Montreal, Toronto and Vancouver.

“We have a common interest in preserving community assets,” said Lamouni.

New Market Funds is also working with HocheLab.

In March 2026, HocheLab completed the purchase of a mixed-use building on Rue Ontario in Montreal’s east end — a property whose ground floor has housed La Papeterie de l’Est, a neighbourhood stationery shop, for 30 years.

“Claude Lessard, the owner, wants a well-deserved retirement, but he’s thinking of his employees and his customers,” said Robertson. One option being explored: converting La Papeterie de l’Est into a cooperative to ensure its long-term survival. New Market Funds, which manages the Canadian Co-operative Investment Fund, is helping navigate that potential transition.

The landlord who googled to protect its tenants’ future

Lessard sold the building to a non-profit precisely so that a rent hike would not force the shop to close or push its tenants out.

Gilles Gauthier, another longtime landlord in the same neighbourhood, shared the same concern. He had always kept rents affordable in his 15-unit residential building. Faced with retirement, he worried: what rent increase would a new owner impose to make the investment pay?

Gauthier did something simple and remarkable. He typed “how to sell to a non-profit?” into a search engine and landed on the page of l’Alliance des corporations d’habitations abordables du territoire du Québec (ACHAT), a network of affordable housing providers. ACHAT directed him to HocheLab, which operates in his neighbourhood.

“I still get goosebumps thinking about a landlord actively looking to sell to a non-profit,” said Robertson.

“Claude and Gilles wanted to be good landlords until the very end. That is exactly what we want to be. We are doing things differently — taking care of our territory by protecting its commercial and social fabric.”

“HocheLab’s first priority was to build a network of partners: financial institutions, funds, investors and governments,” he said, adding, “We convinced them — some through the social impact argument, others through the lens of territorial resilience. Now we are ready to seize opportunities and build our portfolio.”