As Royalmount takes shape, its creator offers a peek at Phase 1

Carbonleo CEO Andrew Lutfy is betting on the untapped desire Montrealers have for luxury goods. Will they be drawn to the midtown megamall?

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The steel beams are in the ground, the concrete is being poured and the glass roof is already up.

Bit by bit, Phase 1 of the Royalmount megamall is taking shape in the Town of Mount Royal’s industrial sector, near the intersection of Highways 15 and 40. Opening of the luxury retail and lifestyle centre, which has been pushed back multiple times due in part to the pandemic, is currently scheduled for late summer 2024.

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The $7-billion real estate project, which promoter Carbonleo calls the biggest private investment in Quebec in decades, will undoubtedly reshape an unloved part of Montreal Island. What the ambitious, controversial development will look like upon completion — whenever that is — is still very much up in the air.

That’s because T.M.R., which has exclusive say on approving the work, won’t grant developer Carbonleo the zoning change it needs to build the housing units that are integral to chief executive Andrew Lutfy’s grand dreams of a 100-per-cent carbon-neutral mixed-use development.

Built around a 1.8-acre urban park that’s destined to host public art and cultural events, Royalmount’s Phase 1 will include an aquarium, an outdoor public piazza, more than 450,000 trees, some 100 electric vehicle charging stations and a $25-million covered pedestrian bridge over the Décarie Expressway linking the mall to the de la Savane métro station. Over time, several hotels and office towers are also expected to be part of the complex, which has been designed so that on-site services will be no more than 15 minutes’ walking distance apart. The district will also eventually be home to a 3-kilometre-long linear park for pedestrians.

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Royalmount is “the entrepreneurial expression of a vision,” Lutfy told the Montreal Gazette during a recent tour of the construction site as he pointed toward the footbridge’s foundations. “Whatever you see on Day 1, it’s just the beginning. The first phase only represents 10 per cent of the project. As long as I’m part of the picture, and I’m not going anywhere, we are going to keep reinforcing it and making it better. This is a lifetime project.”

Phase 1, estimated to cost $1 billion, will have more than 170 businesses, including about 60 cafés and restaurants anchored in a 824,000-square-foot, two-level retail and lifestyle complex that includes a “Luxury Row.”

Half of the brands will either be new to Quebec or unique concepts, Carbonleo says. Global luxury retailers such as Gucci, Louis Vuitton, Michael Kors, Tiffany & Co. and Versace, as well as local brands such as Dynamite, Garage and Rudsak, will have flagship stores on site.

Charles de Brabant, executive director of McGill University’s Bensadoun School of Retail Management, thinks the time is right to open a luxury mall in Quebec’s biggest city. With Montreal Island home to wealthy neighbourhoods such as T.M.R., Westmount and Beaconsfield, as well as thousands of foreign students, many of which come from well-to-do families, Royalmount will fill a need, he said.

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“If you look at Montreal’s luxury retail offering and you compare it to what we have in terms of hotels, restaurants or culture, it’s not up to par,” de Brabant said in an interview. “Some of the wealthiest neighbourhoods in Canada are in Montreal, and there is virtually no retail offering, with the exception of automobile dealers. So we have some catching up to do. When people want to splurge on luxury, they have to shop elsewhere.”

Covered footbridge connecting Royalmount to de la Savane métro.
Construction has begun on the $25-million covered footbridge over the Décarie Expressway that will link Royalmount to the de la Savane métro station. Artist rendition courtesy Carbonleo.

Carbonleo data show roughly 85 per cent of the luxury goods bought by Montreal-area residents are purchased either outside the province or online.

Having a mall like Royalmount in the city will bring significant economic benefits, Lutfy says.

“Is Quebec currently collecting sales taxes on these transactions? No. Are you creating any jobs? No,” he said. The opening of Royalmount “is going to result in huge economic activity, retail jobs, supply chain jobs and everything else.”

Besides, luxury goods retailers would never set up flagship stores downtown, he insists.

“The brands have to be aligned with going downtown — and they are not aligned with going downtown,” said Lutfy, who owns and developed the Four Seasons Hotel on de la Montagne St. “They would never open on Ste-Catherine. It’s unfortunate that Montreal’s high street is also the red-light district. We are providing the brands a controlled, 100-per-cent safe, non-red-light district master-planned area.”

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Still, drawing luxury shoppers to the area could be Royalmount’s biggest challenge, said Jacques Nantel, professor emeritus of marketing at the HEC Montréal business school.

“I have a lot of respect for Mr. Lutfy but I have a hard time believing Royalmount will become a destination,” Nantel said in an interview. “The problem with Royalmount is that you’re creating a bubble that’s not adjacent to downtown, which is where Montreal’s heart beats. It’s a risky bet.”

Royalmount has drawn criticism practically from Day 1.

Some opponents worry that the new mall will siphon visitors away from downtown Montreal. Downtown businesses would see their sales erode by 6 per cent once the mall opens, Montreal’s economic development and housing commission predicted in a November 2018 report.

“This is the kind of development that weakens Montreal,” Glenn Castanheira, head of the Montréal Centre-Ville downtown merchants association, said in a recent interview. While downtown will continue to attract its share of shoppers because of its store mix, a project like Royalmount “will cannibalize downtown’s margins. Every dollar spent at Royalmount will not be spent elsewhere.”

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Interior of the Royalmount megamall under construction.
Construction workers in the shopping mall section of the Royalmount project. Photo by John Mahoney /Montreal Gazette

After facing opposition from a group that represents downtown performance venues, Carbonleo scrapped plans to include two concert halls with a total capacity of up to 6,000 spectators, capable of hosting shows such as Broadway-style musicals.

A coalition of concerned citizens, Royalement non!, also came out against the project in February 2019, saying it would favour “economic displacement” — away from downtown — rather than economic development.

And while Carbonleo has indicated the project would boost daily traffic on Highways 15 and 40 by no more than 20,000 vehicles, or 5 per cent, many critics have warned of the increasing congestion risks while scoffing at the notion that patrons of an upscale shopping mall would take the métro.

In fact, a traffic study made public by Montreal’s economic development and housing commission in 2018 estimated that Royalmount would add 140,000 daily trips and lengthen travel times during the afternoon rush hour by up to half an hour.

“This intersection is one of the most congested areas in Canada,” says Jean-François Boisvert, president of an environmental group called the Montreal Climate Coalition. “Is this the best use that could be made of this location? Did we really need another mall?”

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Community groups have also bemoaned the absence of affordable or social dwellings as Montreal continues to grapple with a housing crisis.

Lack of social housing “is a missed opportunity,” Catherine Lussier, a spokesperson for the Front d’action populaire en réaménagement urbain housing group, said in an interview. “Our big preoccupation is that municipal authorities have expressed no clear will to force the promoter to develop social housing on the site.”

Royalmount chief executive Andrew Lutfy gazes up at the glass ceiling under construction.
Royalmount has gone through several iterations since its official unveiling in May 2015. “I think we’re at version 5 or 6 now,” said Carbonleo CEO Andrew Lutfy.  Photo by John Mahoney /Montreal Gazette

T.M.R. approved plans to build the megamall in September 2015 under then mayor Philippe Roy. That first incarnation did not include housing.

Royalmount has gone through several iterations since its official unveiling in May 2015.

“I think we’re at version 5 or 6 now,” quips Lutfy.

An updated version, rolled out in 2018, introduced up to 6,000 housing units.

Then in February 2020, one month before the onset of the COVID-19 pandemic, the developer introduced a scaled-down project with 4,500 residential units and fewer parking spaces.

Phase 1 is now projected to include parking for 1,747 vehicles and 498 bicycles, a Carbonleo spokesperson said this month.

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Today, more than eight years after the project’s launch, Lutfy’s vision of a mixed-use development has yet one more political obstacle to overcome: T.M.R. Mayor Peter Malouf, currently serving his first term after being elected in 2021 partly on a pledge to block housing at Royalmount, remains opposed to the idea.

Costs associated with building municipal infrastructure to service the new dwellings are too great, as is the risk that the new residents could eventually join forces to push out the very industries that populate the area, Malouf says.

“I want to see the project work, but I haven’t found any arguments that can justify putting residents in there,” Malouf says in an interview. “I don’t see as of now, and council doesn’t see as well, that there’s a real benefit to the quality of life of the residents of T.M.R. to having residential units in an industrial sector. You have to end up building a city within a city.”

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Overview of the Royalmount project.
An aeriel view of the Royalmount site, at the intersection of Highways 40 and 15. Artist rendition courtesy Carbonleo.

Besides being located next to one of the most congested intersections in Canada, Royalmount will be close to major industrial sites such as a Kraft Canada facility, a Dollarama distribution centre and a manufacturing plant operated by packaging maker WestRock. All three generate substantial truck traffic, Malouf says.

“The co-existence of residential and industrial is extremely challenging,” Malouf says. “There’s dust, odours, noise from the trucks. As a resident you are going to be saying: ‘I can’t sleep at night.’ If one day the residents band together and you have to tell those businesses they can only operate from 9 a.m. to 5 p.m., those businesses will leave.”

Lutfy is undeterred, saying that he plans to keep pushing for a zoning change and that talks with T.M.R. are ongoing. The developer’s plans for housing units built on the Royalmount site include condos and “mid-range to high-end” studios.

“For me it’s not a question of if, but a question of when” housing will be built at Royalmount, he said. “I’m 100 per cent confident that we will have a residential component. This is a mixed-used development. Sustainability, reducing cars — a five-minute city answers all of that, especially when you’re connected to a hydroelectric métro station. To me there’s no rational reason why we wouldn’t have housing.”

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For the city of Montreal, which has long opposed the development and pressured for it to be scaled back, the construction of new dwellings would be welcome.

“The addition of housing units would represent significant added value to the Royalmount project,” city councillor and executive committee member Robert Beaudry said through a spokesperson. “This is a point of view that we have made clear to the Town of Mount Royal, which is autonomous in the supervision of the project and its zoning rules. Nevertheless, we invite the town and the developer to continue their discussions in order to develop a resilient project that respects best practices.”

To be sure, as Malouf points out, any new dwellings built at Royalmount would do little to solve the housing crisis.

“I believe in housing but do you believe we’re talking about affordable housing here? No,” he said.

Carbonleo chief executive Andrew Lutfy leans over a maquette of the Royalmount project, pointing to a building.
Carbonleo CEO Andrew Lutfy with a maquette of the $7-billion real estate project that illustrates his dream of a 100-per-cent carbon-neutral mixed-use development. Photo by John Mahoney /Montreal Gazette

Despite the uncertainty over housing, Lutfy is adamant the creation of a new midtown district around Royalmount will be worth the investment.

“I see this project as being more viable, more relevant for our community today than ever before,” he says. “When I think about this project, I think about a park and everything that radiates around a park. My definition of success is multiple generations together, parents and children, grandparents, friends. To me, Royalmount creates a gathering place, a place where people will reconnect and invest in one another. If you happen to buy something on the site, great. Of course the retailers will hope that people will do more than that, but at the end of the day, it’s all discretionary income.”

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And don’t be surprised if Royalmount’s future phases stray from the current plan, Lutfy adds.

“We’re doing our best to get it right, but we’re going to get it wrong. No one is perfect,” he said. “With so many moving parts, we’re not going to get everything right. What we are delivering next year is only 10 per cent. The other 90 per cent is a blank canvas, for which we can course correct — and we will course correct. We will respond to the market. I’m sure there’s going to be all kinds of demands that I would have never anticipated. Let the community co-create with us and figure out what’s next.”

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