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Managing Montreal businesses on the move as low-rent neighbourhoods go upscale

Rue Esplanade in the Mile End area of Montreal, August 3, 2016.

Christinne Muschi for The Globe and Mail

For six years, Nic Delisle made guitars at a small workshop in an old industrial building in Montreal's Mile End neighbourhood.

The co-operatively run space, shared with several other guitar makers, was where Mr. Delisle turned a hobby into Island Instrument Manufacture, a full-time business. Several other people in the co-op also launched businesses.

In early May, the members of the Mile End Guitar Coop got an unpleasant surprise: They were being evicted. Their building was being turned into offices and they had 60 days to move.

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On the eastern edge of Mile End, one of Montreal's trendiest neighbourhoods, is the former heart of Canada's garment industry. It's an area that was in decline for more than 30 years.

But over the past decade, artists and artisan businesses have moved into the former warehouses and factories – attracted by low rents and proximity to the neighbourhood where many of them lived.

Now they're being pushed out, replaced by companies such as video-game giant Ubisoft and Sun Life.

"Artist workshops are not their priority tenants," Mr. Delisle said.

He's not alone.

Anne Dardick is the founder of Dot & Lil, a bath- and body-products brand. When her business grew out of her home, she moved into an industrial space in the neighbourhood.

"The neighbourhood just completely changed around us, and for small manufacturers like us, it was tough to even find landlords who wanted us there any more," she said. "Those buildings were built as industrial spaces, but the landlords prefer having office space in them, rather than tenants who actually make anything now."

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With her rent set to rise by 15 per cent and a landlord who wouldn't give her a lease that lasted longer than two years, Ms. Dardick moved her business out of the neighbourhood.

Among the area's new inhabitants are a large number of tech startups. Being close to other startups is an attractive proposition, said LP Maurice, the CEO and co-founder of Busbud, a startup that helps people book bus tickets.

While rents may have risen in Mile End, offices are still inexpensive compared with the downtown. There are also amenities that come with being close to a trendy residential and commercial neighbourhood, one where many young professionals want to live.

Mile End isn't the only place where Montreal is starting to see rapid gentrification – and for some business owners, that means walking a fine line.

A little more than four years ago, Pierre Lessard-Blais opened L'Espace Public. It was the first microbrewery in Hochelaga, a working-class neighbourhood near Montreal's Olympic Stadium. It's a changing neighbourhood – across the street from his bar is an organic grocery store next to a pawn shop.

"We're part of that change, we are agents of gentrification," he said.

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But Mr. Lessard-Blais has mixed feelings about gentrification. While there are new opportunities for businesses such as his, he doesn't want the character of the neighbourhood where he lives and works to change too much.

Still, he said he knows that every July 1, Quebec's traditional moving day, brings more potential customers to the neighbourhood.

A mixture of businesses is important, and part of the neighbourhood's charm, said Mr. Lessard-Blais, who is also president of the local merchants' association.

"There's something romantic about buying your bread from one place, buying your coffee from another one and then serving those guys a beer at the end of their day," he said. "We need a bakery, but we also need the Dollarama."

Mr. Lessard-Blais, who opened L'Espace Public with three friends, said they wouldn't have been able to afford a business in a more expensive neighbourhood and they would have come up against more competition.

His neighbours are also seeing opportunities. A toy store down the block recently started selling board games aimed at an older audience. It's a way to cater to the people who are moving into the neighbourhood without losing the existing client base.

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But there have been reports of anti-gentrification vandalism in the neighbourhood. Mr. Lessard-Blais said a real discussion needs to take place about social housing, but he added that vandalism and violence make that discussion harder to have.

"It starts the debate the wrong way," he said. "It quickly becomes a wedge issue."

Ryan Bloom has seen the vandalism first-hand. He's the co-owner of a restaurant and bakery in St-Henri, a working-class neighbourhood in southwest Montreal, as well as a nearby barbecue store.

"We clean it up," he said. "We have sort of factored it in as a cost of doing business."

He said no group has ever taken responsibility for the vandalism in the neighbourhood, and that while he suspects it has to do with gentrification, there's no way to know for sure.

Gentrification is a touchy subject in St-Henri. Several business owners in the area said they don't feel comfortable talking about it in the media.

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There's no doubt that the area is changing rapidly. Condominiums are going up all along the Lachine Canal, which borders the neighbourhood. Nearby Griffintown was home to fewer than 2,000 people in 2006. By 2011, it had grown to more than 6,000.

Most of those new residents live in newly constructed condos. That means new customers for people such as Mr. Bloom, as well as new competition.

"Ultimately the consumer decides who stays and who goes," he said.

There are also fears among some business owners of rent increases. A year ago, the owner of Café St-Henri, the first contemporary coffee shop in the neighbourhood, said his annual rent was rising by $23,000, to $63,000, more than he could afford.

In Mile End, Mr. Delisle and the members of the guitar co-op were able to find a new workshop near their old one. A Kickstarter campaign helped them cover the moving costs. But they're already thinking about the next move.

"We don't expect this to be permanent," Mr. Delisle said. "You can't stop that momentum."

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