Quebec's retirement home operators might get some aid from a dedicated $200 million provincial government fund that aims to reverse the recent closings of such homes.
The bailout cash earmarked by Quebec seniors minister Sonia Bélanger in an announcement at the end of January seeks to stem the flow of retirement home closures that have led to a decline in the total number of units during a time when the Quebec population needs the total to increase. The first phase of the funding will go to operations with 30 units or less.
Until recently, Quebec’s retirement home industry was thriving as such operations have attracted a wider clientele in the province than seen elsewhere in North America. Several companies built large new facilities at a pace sufficient to outnumber the ongoing closure of older and smaller operations. The new builds have slowed, while smaller, older retirement homes have continued to close with over 100 closing per year during the last five years. The slowdown of new builds have combined with the closures to lead to a decline in retirement home units for the first time.
The worst might be yet to come. Newer and larger operations in the province might not be successful going forward, according to the Quebec seniors’ residents association called Le Regroupement Québécois des Résidences pour Aînés, RQRA.
“There has been a big rise in costs but revenues have not kept up,” said RQRA representative Hans Brouilette in an interview. “So all of them, non-profit, big, small, they all have the same problem. The small ones are closing and the big ones are telling us that they could close later this year.”
Quebec’s retirement home units dropped to 136,844 in October from 137,728 one year before, according to the RQRA.
Brouillette cites inflation, high interest rates and labour shortages for the challenging circumstances and notes that government regulations have taken their toll, including an order to add sprinklers in all retirement homes, a costly procedure that many say they cannot afford.
Conversions
Rising apartment rents throughout the province have led some retirement home operators to seek to transform their operations into regular apartment units. Brouillette, who previously represented landlords association CORPIQ, notes that operating a regular apartment property is far less onerous than a retirement home.
In one recent example, retirement home owner Kevin Hazout announced the closure of his 150-unit retirement home at 5930 Pie IX Blvd. in August in order to turn the units into apartments. Hazout’s company purchased the property in November 2021, according to CoStar data. The 62 remaining residents will be moved by mid-August as Hazout coordinates with provincial health authorities, known as CIUSSS.
"We are well aware of the inconvenience to our residents, which is why we have been working closely with CIUSSS for several months to plan the transition properly and minimize any negative impact on them. Residents will benefit from personalized support measures to best meet their needs. The entire process will be carried out in full compliance with all Quebec and municipal regulations applicable in the circumstances," Hazout said in a statement provided to CoStar News.
Apartments are in great need in the Montreal area, where the vacancy rate hit 1.5%, according to a newly released Canada Mortgage and Housing Corp. report. The vacancy rate was down from 2% one year earlier and 3% the year prior. Rent rose by 7.9% to $1,096 for the average purpose-built apartment unit in the Montreal area, according to the report.
Retirement home closures have grabbed headlines in the province, including another case in Quebec City where owners of the 76-unit Summit residents at 1300 de la Canardière Road asked its residents to leave on a 20-day notice. The closures have led some politicians to call for legislation banning transformation of retirement homes into apartments, while some have urged the provincial government to nationalize the retirement homes.
Toronto-based Stephen Hiscox, who is CBRE’s expert on the Canadian retirement home industry, told CoStar News in an email that multiple factors, including labour challenges, agency costs and high operating expenses have combined to challenge the industry and are likely to blame for the dire situation in Quebec.
“I foresee this happening across the country where old assets are replaced by new in anticipation of the coming generations of seniors,” said Hiscox in an email.