Montreal: Vintage Port
The abandoned marine-fitting warehouse on the city's waterfront is at once a symbol of Montreal's past and future. With its broad exposed steel beams, the building still looks industrial. But inside, programmers in jeans and T-shirts type away furiously at their Octane computers--heavy-duty Unix machines made by Silicon Graphics. "Isn't it fitting that Montreal's new economy is being resurrected where its old economy once stood?" asks François Plamondon, senior vice-president and CFO for Discreet Logic, a software-development firm specializing in creating, editing, and compositing imagery for film, video, broadcast, and interactive games.
That old economy was founded on textile and clothing manufacturing, but today Montreal has lost much of that trade and many of its jobs. To lower its 12% unemployment rate, the city is hoping to attract new-media companies, and it's using its international flair, favorable exchange rates, and cheap space to do that.
Cheap space, in particular, is something Montreal has in great abundance: factories, warehouses, and office buildings stand noticeably empty everywhere you go. Particularly hard hit was the once-vibrant Old Port, which had seen all its major activities cease by 1978. Despite some sizable investments--a total of close to $100 million (in Canadian dollars) to refurbish the waterfront from the federally owned Old Port of Montreal Corp.--some developers remain fearful that economic instability will force the city to abandon the area.
But where some see risk, others see opportunity. In 1995 Richard Szalwinski, CEO, president, and founder of Discreet Logic, cofounded the Zone Corp., a real estate holding company. The Zone Corp. purchased the old warehouse from the city for about $1.2 million. In short order the Zone Corp., along with a small local architectural firm, redesigned the facility and retrofitted it with the latest in digital technology. The floors were lined with copper cables that can deliver information at speeds up to 100 Kb, and Discreet Logic's IBM, Macintosh, and Silicon Graphics machines were connected to the Internet via T1 lines.
Today the building is filled to capacity with 200 employees from Discreet Logic and 40 more from another multimedia venture. The Zone Corp., which holds an option on several waterfront buildings, has a grand vision of transforming the moldering canal area into a thriving cyberdistrict where multimedia, new-media, and Internet companies share ideas and bandwidth. "Everyone was talking about developing the area," says Szalwinski, "but no one was doing it. So I finally made the move."
To make the plan work, Szalwinski must compete with the rest of Montreal for software start-ups. Although down a bit from last year, the city's overall vacancy rate is 8.8%, which means that space is a bargain. Charles Crawford and David Rolph paid just $5 a square foot gross for office space when they launched Iron Horse Multimedia, a publisher of CD-ROM training and reference applications, at the end of 1996. Their offices are in a former clothing factory on crowded Ste. Catherine Street downtown. "Space is very cheap," says Crawford, "and all you need is an office and a computer to start one of these companies."
What Montreal offers in terms of rent, the province of Quebec matches in other incentives. Many start-ups receive a generous tax reimbursement of 50 cents on the dollar for investments in research and development. "We are in the city primarily for economic reasons and because we enjoy the way of life in Montreal," says Crawford. "We will probably sell very little here, but it makes sense to do business here."
Two other factors played a role in Crawford's decision to set up shop in Montreal. The first is the city's labor pool. As Crawford expands, he can harvest talent from one of the four major universities there--two French-speaking and two English-speaking. McGill--with its strong reputation in science and engineering and a growing computer science department--is only blocks from Crawford's office. Second is Montreal's growing film industry. (The city is home to Canada's National Film Board.) Nearly all of the filming and postproduction on Crawford's latest CD-ROM, The War Room, was done in Montreal.
Then there's the city itself. Montreal has virtually no crime: Crawford can walk among an eclectic mix of gothic churches, Greek-revival office buildings, and Chicago-style skyscrapers at any time of the day or night without fear. Montreal also caters to the young, a key factor for companies that rely on 20- and 30-something programmers who are given to keeping odd hours.
"Things go on all night," says Dieter J. Runge, a producer for Iron Horse, who recently moved to Montreal from Silicon Valley. "The city is a nice place to work and much more relaxed than the Valley pretends to be."
Although Iron Horse plans to distribute primarily in the United States, other multimedia companies have chosen Montreal because their customers are there. For example, many large pharmaceutical companies--drawn by the R&D credits--have a presence in the city. In 1995 Jean Lalonde and two partners, Pierre Bernier and Gaetan Ruel, began working in Lalonde's basement in Montreal, producing CD-ROMs for sales representatives at Merck. In a matter of months they created a company called I C Axon and moved into a small town house in the Italian section of the city. Today the company has 45 employees and more than $2 million in sales, and it is once again searching for another home. "The Old Port has great growth potential," says Lalonde, "though we have looked at the Peck Building."
Lalonde is referring to a brick office building that is yet another nursery for high-tech start-ups. It's located in the heart of the Plateau, a funky section of town where artists and computer programmers drink cappuccinos side by side in small cafés. At $5 to $10 a square foot, the former textile building houses such film and multimedia companies as Wild Heart Productions and Thoughtworks Multimedia. The arrival of French game-development giant UBI Soft on the top floor attests to Montreal's success at attracting new-media companies from outside North America.
