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December 2021
CONSUMER REAL ESTATE CANADA
The Takeaways & Trends - Cross-Canada Consumer Real Estate Market Conditions Conference Call

“FROM MAIN STREET TO THE MAIN MALL AND ANYWHERE THAT RETAIL HAPPENS IN CANADA…KEEPING RETAILERS, FOOD SERVICE SPECILISTS, E-COMMERCE MERCHANTS, ECONOMIC DEVELOPMENT PROFESSIONALS, RETAIL SPACE BROKERS, BUILDING OWNERS & DEVELOPERS, AND INDUSRTY SUPPLIERS CONNECTED!”  

Hello fellow Canadian consumer real estate professionals, we hope you enjoyed the recent CREC update on Canadian consumer real estate market conditions. Here are the takeaways and trends from our call on December 16, 2021, complied by the call moderator Michael L. Kehoe.

TOP INDUSTRY TRENDS IN 2021

The industry talent deck gets shuffled in 2021 as many consumer real estate professionals change firms, go independent, switch industries or just burn out and leave the business. Many industry practitioners of the Boomer generation just faded away. Maternity leaves are up dramatically so we know that working from home was productive in so many ways! Some industry members are leaving due to pay, but few employers are offering raises to help with staff retention...its weird out there..

The rise of lux retail in major Canadian cities as luxury retail clusters are thriving and for some, it is the best of times in the worst of times...did someone say that the Chanel boutique in downtown Vancouver enjoyed $100 million in sales over that past year?

Consumer real estate happens everywhere from e-commerce to bricks and mortar stores & restaurants to food trucks, even on your phone – Stackt Market is a 100,000 square foot shopping experience designed entirely out of shipping containers and opened in Toronto in 2021. What’s next? Whatever and wherever it is in Canada in 2022, it is it will involve your CREC colleagues...

Health care workers are often hailed as “pandemic heroes”. Consumer real estate professionals who lease, manage and administrate retail venues across the country are also “heroes”, keeping the stores and restaurants leased to supply the nation with goods, services and food from coast to coast to coast. Without your CREC colleagues, the shopping and dining experience in Canada would be a lot different that it is today...and it will be different again in the future...

Retailers and restauranteurs kept their customers close, their suppliers closer, and their landlords on speed-dial. Store & restaurant owners got to know their landlords up close and very personal in 2021...

The great resignation across all sectors of the economy, where many professionals left corporate life to start new entrepreneurial ventures and lease retail, food service and office space...

The emergence of Door Dash & Skip the Dishes, along with retail and food service pop-up locations, where tenants are skipping the leases and opting for shorter terms and performance driven rents... The continued emergence of the dollar stores...the retailers that ate Canada...Dollar General planning 1100 stores in Canada and Dollarama with 1397 stores opened over the past 29 years with 60-70 new stores planed in 2022. With each location between 8-15,000 square feet these gorilla sized retailers are on a roll...

The outsourcing of the leasing function at the Ivanhoe Cambridge shopping centre portfolio to a major brokerage. Expect to see more of this as JLL, CBRE, Cushman Wakefield and the other big brokerages expand their reach...

The continued momentum of cannabis retail store expansion. This retail sector was a key absorber of consumer real estate in 2021 and the green rush is sure to continue in 2022 along with consolidation and a thinning of the pack...

The shift away from the traditional shopping centre tenant mix as medical clinics and car dealerships open in major malls and other retail venues...

Consumer real estate brokers become therapists and coaches for retail and restaurant owners. Need a shoulder to cry on? Your broker was always there for you in 2021...

Store owners faced continued staff shortages, ineffective government support programs, supply chain challenges and increased shipping costs along with increased shrinkage rates that included flash-mob shop lifters and for some, insolvency and closure... Shopping centre owners densified their properties adding mixed-use towers, diversified their tenant mixes to add non-traditional space users, and worked hard to differentiate their properties from competitive shopping centres.

The Takeaways…regional call contributors reporting:
Newfoundland & Labrador - Nikki Poole CBRE - nikki.poole@cbre.com

  • Hockey is back at the Mary Brown’s Centre in heart of downtown.
  • Gahan House just opened in the former Bier Market space on the harbour front 9000 square feet.
  • Starbucks opened on a pad at Avalon Mall.
  • Craig’s Cookies started in Toronto and recently opened a store front in downtown St. John’s.
  • Vacant restaurant and retail spaces are getting interest with national and local prospective tenants with tours over the past few weeks.
  • Atlantic Place a 6-storey downtown office building is repurposing their main level from food service to tech company office use, the innovation behind the redesign is exciting for this particular property that has not been able to rent their “cafeteria” style food service space.
  • Ending 2021with some great office leasing activity.
  • Oil and gas contracts being awarded and more tech expansion that is promising for the new year.

Atlantic Canada - Vicki Carr - Hardman Group - vcarr@hardmangroup.ca

  • Ontario chain Chung Chun Rice Hot Dog opens in Halifax.
  • 1660 Hollis Street in Halifax is planning to convert vacant office space into one, two and three-bedroom loft residential apartments, building owners will receive $6 million from the Province as part of its affordable housing initiative.
  • Queen’s Marque district on the Halifax waterfront opened to the public the end of November and includes retail, dining, hotel, office, residential space, three public wharfs and new harbor stairs known as the Queen’s Landing which provides the opportunity to walk down and connect to the water.
  • Hart Stores recently opened in Parkway Mall in Saint John, NB leaving the mall with only six vacancies left to be filled.
  • Planet Fitness opening end of December in Lancaster Mall in Saint John, NB.
  • 390 York Street in Fredericton, former railway lands has a proposal going to City Council in January for mixed-use and high-rise residential housing with commercial space on the ground level.
  • Trail Shop and Take it Outside will be opening in Spring 2022 in Moncton adding to their two existing locations in Truro and Halifax, NS, the Moncton combined store will occupy 6,000 square feet of retail space in the Granite Drive area where Costco is located.
  • Legislation has been introduced to allow Cannabis NB to expand its model through private retail stores and direct-from-produced farmgate operations, these will be stand-alone stores, not corner stores, gas stations, etc. in an effort to combat the saturation of the market by illegal dispensaries.
  • Global supply chain issues are hitting industrial tenants as suppliers in China are shipping inventory in advance of manufacturing shutdowns in February due to the Chinese New Year and the Olympics. Needless to say, the early arrival of inventory is placing a stress on already fully occupied warehouse spaces.

Quebec - Tony Flanz - Think Retail - tflanz@thinkretail.ca

  • FYI Doctors, one of Canada’s leading diversified healthcare organizations with 300 stores acquires Bon Look 36 stores.
  • DC based Steakhouse Medium Rare announced that they’re looking to open in Montreal.
  • Quebec based Econo Fitness ramps up expansion in Quebec, since the beginning of the pandemic new stores opened at Place Alexis Nihon, Galeries de Hull, Carrefour Charlesbourg and newly announced Les Rivieres, by year end they will have 70 stores in the Province.
  • Kisses From Italy the Miami-based product distributor and quick casual restaurant chain opens first Canadian location on Fleury Street in the east end and announce plans to open 100 locations in Canada.
  • Columbus Cafe reached agreement at Carrefour Laval, the company is looking to open 80 locations in Quebec via Think Retail.
  • T&T Supermarkets (Loblaw) announces plans to open first store in Quebec, T&T is the largest Asian supermarket chain in Canada with 29 stores, operating in British Columbia, Alberta, and Ontario.
  • Montreal based outerwear specialist Moose Knuckles open a downtown Montreal flagship at the Four Seasons Hotel on de la Montagne.
  • JLL Report says downtown traffic up more than threefold since beginning 2021, second biggest bounce back in traffic to NYC.

Ontario - Lawrence Mosselson - Behar Group - lawrencem@thebehargroup.com

  • Ontario continues to see strong demand from the sectors such as QSR, cannabis and small service retailers
  • Continued problem of supply chain and staffing shortages becoming more acute for retailers.
  • Tim Hortons in Ontario is facing what they are calling a “hiring crisis” with the challenge of retaining existing staff and the inability to hire new workers.
  • LCBO announced that customers should expect to experience product shortages this holiday season.
  • Hotel sector is rebounding both from an occupancy and room rate perspective as well as from the deal activity in the sector, Toronto has the strongest new hotel development pipeline in over a decade with just fewer than 3,500 new rooms either under construction or in the final planning stages and expected to open by 2024, if all rooms go ahead, this will increase existing rooms by 10%.
  • A number of government incentive programs for the hotel industry including the Ontario Tourism Credits program allowing residents to claim up to 20% of their accommodation costs up to $200 for individuals and $400 for families for hotel stays in Ontario. The industrial sector remains extremely strong as well.
  • Quadreal recently purchased 60 acres of vacant industrial land at a near record price of almost $2,000,000 per acre and demand remains strong with net rents of $15-$18 psf for top quality industrial space which is unprecedented though not surprising with an industrial vacancy rate of 0.7% in the GTA.

Manitoba - Michael Stronger - Shindico Realty - MStronger@Shindico.com

  • Winnipeg’s tallest building is nearing completion at 300 Main Street on the SW corner of Portage & Main with Earl’s, Winnipeg’s first OEB Breakfast, and Goodlife Fitness to open on the podium level in early 2022.
  • Locally owned and operated Aveda Salon School has purchased a landmark 33,502 square foot building at 276 Portage Avenue in downtown Winnipeg, currently leasing a 9,000 square foot space and are planning to open in mid-2022 in a substantially expanded premises.
  • Leopold’s Tavern has made a major commitment to the Winnipeg market and will be opening 2 new locations in early 2022 at 1347 Henderson Hwy in a freestanding 3,780 square foot former Pizza Hut & 93 Osborne St. in a marquis corner location at Winnipeg’s highest foot traffic intersection River & Osborne in the Osborne Village

Saskatchewan - Melissa Newton - The Commercial Group - melissa@thecommercialgroup.ca

  • A big topic in Saskatoon, and something that City Council had promised was that in Q4 2021 they were to announce the location of the new downtown arena. This is going to have a huge impact on the retail and hospitality industry for the City and at the moment it is a guessing game as to which site will be selected. I suspect that after this announcement we will see some shift in the retail market and hopefully be able to attract new business to the downtown core.
  • A Starbucks location is still vacant and the Bird Jewelry space is also coming to the market.
  • TD bank is moving into a former Milestones location on one of Saskatoons main drives, the property is 5,700 square feet with drive thru potential, this means there will be an opportunity for a potential redevelopment on their current location which is just across the street.
  • Class A office activity has seen a slight uptick, B and C class still see vacancy rates of about 16% in downtown Saskatoon.
  • Samsung in Regina has set up a regional office in downtown to assist Sasktel the crown corporation for telecommunications to set up the 5G network, expected to create about 70 jobs, good news for downtown Regina which has really been struggling in the past few years.
  • Industrial market continues to dominate the majority of activity in our market with low vacancy rates, record breaking land sales and a strong appetite for quality new investment.
  • Saskatoon and Regina airports expected to see their first international flights since COVID began, not sure if this has had an impact on business travel but regardless the snowbirds are very happy...looking forward to a busy and exciting 2022.

Alberta - Edmonton - Brett Killips - Cushman & Wakefield - Brett.Killips@cwedm.com

  • Northern Alberta news...Freshco has converted a former Sobey’s on Franklin Avenue and is also under construction of a new Freshco grocery store in the East Grande Prairie district of Cobblestone
  • One notable new entrant to downtown is the Edmonton City Club set to open in Fall 2022 in a central downtown core location, a social club that will offer meeting, dining and socializing spaces.
  • Consumers have largely accepted the restriction exception program which allows business to operate without most restrictions. This applies to all categories of restaurants here that have table service. The Provincial government has suggested that further relaxations of restrictions may occur as well and most restaurant categories continue to perform well in light of this.
  • One of the most significant developments in Edmonton at present is the Ever Square development north of the Whitemud freeway between Calgary Trail and Gateway Boulevard, a mix of office and drive-through QSR tenants for a total of about 150,000 square feet.
  • Vacancies created by the exit of GYMVMT continue to be backfilled, most recently at Christy’s Corner on St. Albert Trail which will be occupied by a roller rink in the early new year.
  • Southern Alberta News...the redevelopment of Northland Village Mall in northwest Calgary was announced recently by Primaris REIT, the project will be underway in early 2022 and the enclosed mall will be transformed into an open-air shopping centre with 400,000 square feet of retail space anchored by Walmart, Winners, Best Buy, residential towers will added to the site increasing the density.

British Columbia - Neil McAllister - Lee & Associates - neil.mcallister@lee-associates.com

  • BC is slowly recovering from the extreme rains that flooded the Fraser Valley on November 14th cutting off roads, railways and pipelines, each are being restored but biggest challenge is the Coquihalla Hwy with 22 washouts, Highways Dept is hoping for a partial re-opening of that Hwy soon.
  • Trending retail topic; temporary one year property tax exemptions expired November 26 and affected tenants have lost the ability to claim property tax relief on air space above their stores, lands are taxed on the basis of highest and best uses and land values are soaring
  • Year end market data is coming in and the Metro Vancouver retail vacancy rate is 1.29%, rental rates are up 4.4% year over year and average rates were $31.50 / sq. ft. are now $32.80 square foot.
  • Landlords are holding firm on asking rates, creating a bit of a disconnect as tenant’s deem that lower rents and greater incentives are required.
  • Despite all the headwinds, there was pretty strong activity across all asset classes in BC in 2021.

CREC Advisory Panel Updates
Slava Fedossenko CRRP - Avenue Living -
sfedossenko@avenueliving.ca

I have been pleased to have served as the CREC Advisory Panel Lead over the past twelve months and want to thank everyone who has attended and contributed to our cross-Canada market update calls and the Talk Shop Zoom meetings throughout 2021.

The input and dedication of the CREC Advisory Panel members is also appreciated and I am excited to confirm that two new esteemed members of the industry, Luc Corneli and Donald Burton have joined the Panel. Everyone is excited to push ahead and grow our CREC community in 2022. Another big thank you to our first market update call sponsor, Launch Commercial Space Marketing. Sponsorship opportunities for both our cross-market update calls as well as Talk Shop Zoom sessions are available. Please reach out to me or our CREC call moderator Mike Kehoe for details.

We are proud to unveil the new CREC logo, which you can see now on our website and social media platforms and all future communications. Thank you to everyone involved in the creation and selection of our new visual identity.

If you are interested in learning about all facets of the consumer real estate industry from leaders in their respective fields across the country, and to see old friends and colleagues in a relaxed coffee shop environment, we would love to see you on the next CREC Talk Shop Zoom session.

The first CREC Talk Shop session of 2022 is scheduled for Wednesday January 12, 2022, at 10AM MST / 12PM EST. We are grateful to have the opportunity to learn from one of our industry’s most accomplished and respected executives, Darryl Schmidt, Vice President National Leasing with Cadillac Fairview. This is not one to miss, so watch for the calendar invitation in your e-mail!

If you haven’t already, please visit our website at www.crec.live where we are in the process of publishing all the CREC Call transcripts – the Takeaway & Trends emails that you have received over the last 18 months as we build a database of knowledge and content. There you will also find links to the CREC LinkedIn and Facebook pages, as well as a link to the Go Fund Me. There is no cost to participate in CREC, so your donations are most appreciated to help cover CREC costs as we continue to grow.

Keynote speaker: Craig Patterson, Editor-in-chief at The Retail Insider

2021 - International Brands Entered Canada

  • Garret Leight
  • Golden Goose
  • Tudor
  • Daiso
  • Forever 21
  • Athleta
  • Alexander McQueen
  • Lucky Jeans
  • Lucid Motors
  • Big Frog T-shirts
  • Repair and Run
  • James Perse home

2021 - Trends

  • Digital push, continued shift online
  • All trends accelerated
  • Rush for home deliveries, tech companies jumping over each other to win
  • Warehousing a key asset with e-comm
  • Amazon major growth, announcing facilities with more to come
  • Online marketplaces in vogue, HBC, Primaris and others
  • Ghost kitchens expanding
  • Grocery delivery/other
  • Social media selling
  • Supply chain will be issue

2022 - Retailers Expanding

  • FreshCo expanding in Western Canada
  • Pet retailers expanding and merging
  • Hudson’s Bay downsizing stores, future in question, few to shut
  • Walmart continues to invest in all channels
  • Costco expanding
  • L.L. Bean expansion ongoing
  • Decathlon expanding, more to come in 2022
  • Ikea innovating, downtown store, design centres
  • Sephora adding over 50 stores
  • Other new entrants on the way, Lulu competitor, few others

2022 – The year ahead

  • Leasing across Canada is relatively strong as we’ve heard on the CREC calls
  • Boathouse taking Le Chateau locations
  • Landlords are looking to densify, add diversity of uses and differentiate tenant types from competitors
  • Luxe in selected nodes, Edmonton and Calgary seeing activity as well as Vancouver and Toronto
  • Store closures on the way, Massimo Dutti, Some HBC/Saks banners in question
  • Aritzia getting into menswear
  • Supply chain, sustainability, food affordability will be issues in the year ahead
  • Craig Patterson involved with the “Centre for Cities and Communities” at University of Alberta where retail and real estate are combined providing interesting learning opportunities for students – sponsorships available.