Commercial Real Estate: Vancouver a 'gem' in luxury retail market
Credit to Author: Evan Duggan| Date: Tue, 03 Sep 2019 18:00:56 +0000
Stoked by the expansion and arrival of international and luxury retailers, Vancouver’s retail market continues to perform as a “gem” in the region’s commercial property market, according to an international property data company.
From July 2018 to the end of July 2019, there was net absorption of 2.1 million square feet of retail space in the Lower Mainland, according to CoStar Group Canada.
Major malls across the region, including Pacific Centre, Oakridge Centre and Metropolis at Metrotown, are all fully occupied with multiple retailers trying to secure space if and when they become available.
Part of the reason could be that B.C.’s economic growth is expected to outpace the national rate in 2019, CoStar said in its report provided to Postmedia. Tourism has also remained strong, likely bringing in wealthy foreign shoppers.
Overall, vacancy in the region’s retail market sank to a record low 1.3 per cent at the end of July, 2019. “That is extremely low,” said Jamil Jamani, CoStar Group’s senior market analyst in Vancouver.
It has become extremely difficult for retailers of all types and sizes to find space, especially in shopping centres, he said. “If you look at any of the major malls — Oakridge, Metropolis at Metrotown, Pacific Centre — they are all fully occupied.”
Luxury retailers that want to be in the downtown core are especially hungry for space. Many upscale international brands have been using Vancouver as a launching pad to the North American market, Jamani said.
“Robson Street is facing increased interest, as well as Alberni Street,” he said. But low vacancy in the desirable sections of those streets is pushing some high-end retailers further afield on those streets or into adjacent streets.
“You’re starting to see luxury retailers scatter not only in malls, but around downtown Vancouver,” he said.
There is some noticeable vacancy in some suburban shopping malls and along sections of shopping streets such as Main Street — especially around 49th Ave, said Craig Patterson, a Canadian retail consultant and editor-in-chief of Retail Insider.
However, those stores are usually smaller spaces which altogether have not elevated the region’s overall vacancy, he said, agreeing with CoStar’s figures.
Patterson is working on a report for the Retail Council of Canada that reveals the country’s most productive shopping centres. He said core shopping centres in Metro Vancouver are experiencing a surge of productivity, measured in annual sales per square foot.
“Park Royal (in West Vancouver) saw an explosion in their productivity to the point where it’s in the top five shopping centres in all of Canada now with more than $1,300 a square foot in sales over the past 12 months ending June 30,” he said.
Downtown Vancouver’s Pacific Centre and Metropolis at Metrotown are also experiencing rising sales per square foot, making them among the most productive in the country, Patterson said.
That optimism however, doesn’t hide the fact that several high-profile retailers have exited the local and national markets in recent years and months, including Sears, Home Outfitters and Payless Shoes, among others. Just last week, Bloomberg reported that fast-fashion retailer Forever 21 was preparing for a potential bankruptcy filing, which would likely result in store closures.
While not all of that empty retail space has been filled, landlords in the Lower Mainland have done a better job than most cities in Canada in replacing those losses, Patterson said.
“The Lower Mainland, being a strong market with limited real estate, I think it has seen more success in filling that space than other parts of the country,” he said.
In some cases, new or recently arrived retailers have filled the space. In other cases, landlords have launched new concepts or filled-in empty stores with alternative uses, including gyms, medical services and grocery stores.
“We’re seeing these boxes being demised and a full-service restaurant might go in one corner,” Patterson said. “Landlords now are really looking to grow and expand food and beverage in their properties.”