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 SPECIALISTS, E-COMMERCE PROFESSIONALS, RETAIL SPACE BROKERS, BUILDING OWNERS & DEVELOPERS AND INDUSTRY SUPPLIERS CONNECTED!
It’s easy to participate and it’s free. To join the monthly cross-Canada consumer real estate market conditions conference call, please visit www.CREC.live to request an invitation to dial in.
This month’s CREC market update call was sponsored was sponsored by: Mario Toneguzzi Communications offering services in writing, editing, social media/content creation, media relations and media training.
TOP INDUSTRY TRENDS
Trending in Canada:
- Mall landlords are experiencing escalating vacancies
- Online shopping is at a record high as COVID helped this trend move at a 10x rate
- In-mall foot traffic has been on the decline and although seeing some uptick post-COVID, experiential activations & pop-ups are what’s driving new leases.
- Retail lease terms have gone from 10 years, to 5, to less
- Consumers are looking for novel experiences, beyond simply buying product as they can do that online
The Takeaways…regional call contributors reporting:
Newfoundland & Labrador - Nikki Poole CBRE - firstname.lastname@example.org
- Federal Government approved the Bay de Nord offshore project, which islanders were anxiously awaiting after some delays over the past few months. This positive news has generated some optimism following a few years of and oil slump and limited hiring.
- A rush of activity the past few weeks! Lack of good inventory of locations for QSR and retail is causing some frustrations and “are there any other locations out there for us, Nikki?” conversations. Dud retail locations that have been vacant for the past couple of years are being snapped up. Many businesses seeking second locations.
- Blackwell shoes has opened Invik at the Avalon Mall.
- Preliminary approvals for rezoning for a Nordik Spa in Flatrock (small community outside St. john’s). This would be the first in the Province.
- A lot of sale activity the past couple months. Former GFW Canadian Tire store sold, former Stantec office building (which has been on the market for almost 10 years) and Neighbours a prominent retail area sold this past quarter and being converted to a dental office, and former Target building sale officially moving to close.
Atlantic Canada - Vicki Carr - Hardman Group - email@example.com
- Minimum Wage increased in all three Provinces:
New Brunswick: Up to $12.75 from $11.75
Prince Edward Island: Up to $13.70 from $13.00
Nova Scotia: Up to $13.35 from $12.95
- Nova Scotia – Popeyes restaurant opened its first Atlantic Canadian location in Halifax on March 30th with cars lined up for hours creating a traffic jams! Mary Brown’s Chicken will be opening in Bedford a Halifax suburb in the former Payless shoe store free-standing building. T. Kettle has opened in the former David’s Tea location in Mic Mac Mall in Halifax.
- New Brunswick – LL Bean is opening its second Atlantic Canadian location in Moncton at CF Champlain, the first location opened in Dartmouth Crossing in Nova Scotia in the fall of 2021. PetValu is opening a new store in Riverview / Shediac – suburb of the Greater Moncton area. Gahan House will be opening a beer garden with food service on the wharf in Shediac this summer, Gahan House is part of the Murphy Hospitality Group out of PEI. Sephora will be opening in the former Le Château premises at McAllister Place in Saint John. In Central New Brunswick, Starbucks will be opening in Miramichi.
- Prince Edward Island – The Prince Edward Island Preserve Company is under new ownership, the first time since the company was founded in 1985. The new owners are Maritime based entrepreneurs, Adam and Marsha Doiron, their other businesses include Mezza Lebanese Kitchen franchises, and Cottage Life Boutique to name a few.
- In all three Atlantic provinces the continued development of mixed-use commercial and residential developments continues to boom. Building permits are at record highs in all three provinces.
Quebec - Tony Flanz - Think Retail - firstname.lastname@example.org
- After more than 20 years as chief executive of the Simons fashion retailer, Peter Simons is
handing the reins to his deputy, executive vice-president & head of corporate operations
Bernard Leblanc. Leblanc, 51, becomes the first outsider to run the 182-year-old retailer in five generations, effective immediately.
- IKEA Canada, which recently announced the launch of its first Canadian Planning Studio in
Boisbriand, Quebec. 9,547 square feet. This unique shopping format allows you to design your
living space with the help of an IKEA specialist. The difference is that instead of taking
products home with you, you discover the look & style for your living space, design it with the
help of an IKEA specialist, then have the products shipped directly to your home or a nearby
- PM Trudeau’s personal chef, Chef Chanthy Yen will be opening a new concession stand at
Time Out Market Montréal on March 29. The chef’s new spot will blend traditional & new
- Huawei, a leading international technology company has announced plans to open a
computer store in Mtl. The store will be a shop in the Canada Computers store
- Empire Company Ltd. has announced that following the launch of Voilà par IGA earlier in
March, it is now ramping up operations of its new online grocery home delivery service in
Quebec. Once the roll-out is complete, Voilà par IGA will service more than 100 municipalities
from Gatineau to Montreal to Quebec City. Voilà par IGA replaces the existing IGA online
service in Quebec, providing a significantly upgraded online ordering & home-delivery
experience with many more one-hour delivery windows to choose from, seven days a week,
from 6 a.m. to 10 p.m.
- RioCan REIT & Harden, announced that effective July 1st, 2022, Harden will assume thirdparty
property management responsibilities for RioCan’s 18 Quebec retail properties. This
consists of RioCan’s entire Quebec portfolio, outside of Gatineau.
- Walmart Canada will be opening a new state-of-the-art, 140,000-square-foot Supercentre with
sustainable features, including a 125,000-square-foot green roof, in Marché Central, one of
Canada’s top performing power centres & Montreal’s premier value shopping destination.
Opening summer 2023
- Maguire, a Canadian, direct-to-consumer footwear brand, is opening its first Alimentation Couche-Tard Inc. is extending its in-store fundraising campaign in
international boutique in New York City. The store, by sisters and Montrealer’s Myriam and Romy Maguire, will be located in Nolita at 198 Elizabeth Street
- Alimentation Couche-Tard Inc. is extending its in-store fundraising campaign in
support of Ukrainian relief efforts to the majority of its stores across North America.
Ontario - Donald Burton – Strathallen Group
From a development perspective:
- SmartLiving, SmartCentres’ wholly owned residential brand, is redeveloping a 13-acre site in Hamilton. The proposed development will include 1,100 new residential units and 15,000 SF of retail. The project will be well connected by transit, located between the Confederation GO station and proposed Eastgate Square LRT station, both less than 1km away.
- RioCan REIT has ambitious long-term plans to redevelop its 61.7-acre Colossus Centre shopping centre in Vaughan with up to 25 towers and buildings comprising over 10 million square feet of housing and retail. For those of you not familiar, this is the unenclosed shopping centre located at hwy. 7 and hwy. 400, most recognizable by Cineplex’s flying saucer shaped cinema.
- Additionally, RioCan is also transforming Shoppers World in Brampton ON into a sustainable, mixed-use, transit-oriented, pedestrian-friendly community with a revitalize retail offering. This will encompass up to four million square feet of mixed-use density, including 4,500 residential units and 860,000 square feet of commercial with retail a strong component.
- The city of Toronto has freed up city-owned properties for affordable housing under its ModernTO plan which proposes between 500 to 600 affordable rental and ownership homes. This plan was expediated during the pandemic with the municipality decided to reduce its office footprint from 55 to 15 locations and freeing up another eight city-owned properties for development.
- Net absorption in Toronto for 1Q2022 was negative (1,064,000 SF) and is continuing to press upward after a brief reprieve at year-end.Office vacancy is now 16.3% nationally, 11.3% on Toronto and 10.2% in Ottawa.
Tech Is Booming:
- Meta Platforms Inc., parent company of Facebook, Instagram and WhatsApp announced plans to build a new Canadian engineering hub located in Toronto. This will create 2,500 new employment opportunities over the next five years.
- Additionally, a new Microsoft facility being proposed in Etobicoke where the company has submitted an application to reposition a former big-box retail location into a new communications technological facility. The proposed building design is very interesting, resembling a barcode.
New Retail Openings:
- Alo Food Group is expanding with a focus on Toronto’s Financial Core, South Core as well as the Yorkville area, Yonge/Bloor, Yonge/Sheppard and Etobicoke nodes. Since its introduction in 2015, Alo Food Group’s fine-dining flagship restaurant Alo has been regarded as one of Canada’s essential restaurants and is consistently ranked as one of Toronto’s top fine dining restaurants.
- The Pet business remains on fire, with five times more pets being adopted throughout the pandemic than in previous years and the average dog owner spending approximately $1,000 on their pet annually.This includes Ren’s Pets which opened its latest location, a 7,400 square foot inline location in the RioCan West Ridge Place at the junction of Hwy. 11 and Hwy. 12 in Orillia. It is the chain’s 39th location. In addition to this latest location, Ren’s Pets will be opening new stores this Spring in Ontario in Thunder Bay, Newmarket, Stouffville, and Niagara Falls.
- Dallas, Texas-based Dickey’s Barbecue Restaurants Inc. has signed an ON franchise agreement and will be opening their Texas-style BBQ in Toronto later this Summer. This is in addition to the Southwest Edmonton location already announced.
- An interesting concept called Little Dribblers Academy has opened what it calls the first children's basketball facility and program in Canada that brings an educational spin to sports. The initial location opened in Brampton in late April and their second location is opening in the Riverdale/Danforth node of Toronto. This is a franchise concept that is looking to expand throughout Ontario in high traffic markets.
- At Yorkdale, upscale French fragrance and candle brand Diptyque is building its first standalone store that will open within a few months. It’s part of a direct-to-consumer expansion for the brand which for years has been available in upscale multi-brand retailers.
- The Yorkdale Diptyque storefront will be in Yorkdale’s new ‘luxury wing’ anchored by Louis Vuitton to the north and Furla and Nespresso at its south-end.
- Also, at Yorkdale, Danish Fashion Brand GANNI is entering Canadian market with first standalone store.
- Yonge & Bloor Update: As previously noted, Apple has pulled out of Sam Mizrahi’s 85-story ‘The One’ project at Yonge & Bloor and has since confirmed that they are suing the developer over countless delays.
- Across the street to the north, construction fencing is up as KingSett Capital prepares for lululemon to open a 12,000 SF 3-level flagship store.
- To the east, HBC continues to liquidate their store which was reported last month as closed after operating from this location for approximately 50 years.
- In closing, and in anticipation Linda’s pop-up presentation, Vancouver based furniture retailer Sundays has converted its first Ontario warehouse and storefront from pop-up location which opened in spring 2021 on Ossington Ave. into a permanent showroom.
Manitoba - Michael Stronger - Shindico Realty - MStronger@Shindico.com
- Palliser furniture announced they will be constructing a new 130,000 Distribution Centre. This will add 300 jobs to their existing 1,200 on their Winnipeg campus which already has 500,000 SF of manufacturing and DC space.
- Starbucks took possession of a freestanding former Harvey’s/Swiss Chalet with drive-thru at the key corner of Corydon & Stafford. This effectively replaces two non-drive-thru stores that were closed on Corydon and on Academy Rd. during the pandemic.
- Hermanos Restaurant & Wine Bar is reopening in the same space after closing two years ago at the beginning of the pandemic. This 5,700 SF restaurant had a phenomenal 10+ year run in the Exchange District area of Downtown Winnipeg prior to the pandemic.
- Construction costs are spiralling out of control. By way of anecdote, a recent roof membrane replacement tender for a small building led to six bids ranging from mid $20’s to high $70’s/SF. On this basis we anticipate some construction projects will be put on hold especially given the existing supply chain and labour issues. The value of existing space continues to rise as a function of high replacement costs and retail vacancy rates are declining on this basis.
Saskatchewan - Melissa Newton - The Commercial Group - email@example.com
- A couple new QSR to enter our market are Broadwalk Burgers, Shakes and Fries, some may know they have locations in Alberta, Ontario and BC. They have secured a pad site with drive through and are expected to open early summer. Church’s Chicken is also coming to Saskatoon on one our main throughfares, new build, pad site, expecting a fall opening.
- Two former Starbucks location that was located on our local business district, called Broadway, an artsy area has been leased by a local restauranteur group who will continue to use the space as a coffee shop and bistro, filling one of the holes and will be welcomed in the neighbourhood. Local Brewery, High Key has purchased a formerly Harley Davidson garage, approximately 8,000 sq ft, downtown Saskatoon and will be opening their doors this fall to a brew pub and restaurants. We also have an Alberta based retailer looking to join our downtown retail which is always exciting, which is very welcomed and exciting, looking to take a 2,500 sq ft space.
- Another local group has recently purchased a former Korean restaurant, which was a unique sale in that the Vendor was only willing to sell real estate, assets and equipment as a package, it took some time to work through the specifics but the local Chef and her team have just opened a natural wine bar, and with her track record it is sure to be a success.
- Pharmacies continue to expand and open new locations throughout Saskatoon and we are finally starting to see an inkling of new office leasing activity, there has been some very patient landlords out there so hopefully we can fill some holes in this sector.
Alberta - Brett Killips - Cushman & Wakefield - Brett.Killips@cwedm.com
- 2nd Generation restaurant absorption: Full service restaurants continuing to be absorbed in Edmonton. The latest was at a former Moxies’s building in West Edmonton, that has been taken by Jerusalem Shawarma.
- Dickey’s Barbeque Pit opening in Rabbit Hill in SW Edmonton April 24th. It is in a shopping centre owned by Allard Developments and anchored by Freson Brothers grocery stores.
- Economically – high level: - ATB Financial released a report showing that Albertans also spent more in stores in 2021 than they have in 8 years. Alberta saw stronger retail sales numbers in 2021, with total sales 13.1 per cent higher than in 2020, and 10 per cent higher than in 2019, according to an analysis from ATB Financial, based on Statistics Canada figures. They said that, even when adjusted for inflation, sales in Alberta in 2021 passed levels not seen since 2014, by 0.6 per cent. Albertans had been travelling less in this period and spending more money in the AB at retail and online stores. Leading categories were - car dealerships, health and personal care stores, building and garden centres and general merchandise stores compared with the last two years.
- Those of us who were at ICSC in Whistler also noticed an increase governmental presence of many municipalities and economic development offices.
- Resurgence of downtown: It’s been about one week since the majority of Edmonton’s government sector employees physically returned to work. In Edmonton, around 3,500 city employees who have worked from home throughout the pandemic returned to the office on Monday. They join roughly 70 per cent of the city's workforce of 12,000 people who had already returned to the physical workplace. That group included employees in transit, waste, parks and roads, recreation centres and in front-line jobs. There are also about 26,000 employees working for the province who have now returned to the office, half of whom worked remotely from home previously. This should drive traffic in the government core.
CREC Advisory Panel Updates
Slava Fedossenko CRRP - Avenue Living - firstname.lastname@example.org
In our last Talk Shop on April 26, 2022, which is available for viewing on our website as well as YouTube, we had the pleasure of celebrating the CREC 2nd Anniversary and a review of the top industry trends in Canada.
The CREC community celebrated the second anniversary of Consumer Real Estate Canada with CREC Talk Shop host Slava Fedossenko CRRP and Introductory remarks from 2022 CREC Chair Melissa Newton that was followed by a review of the top trends in consumer real estate in Canada presented by CREC volunteer leaders.
Talk Shop has already featured a wide range of real estate professionals, including from the tenant side, landlord side, trade organizations, employment agencies, macro-economics, and more.
If you would like to be featured on an upcoming Talk Shop and spend some time interacting with your fellow professionals in a relaxed environment, please reach out to us at email@example.com
Keynote speaker: Linda Farha, Zenergy Communications “Pop-up-go”
Our special guest on the Call was Linda Farha. Linda is the founder and chief connector of Pop-up go’s providing turnkey solutions for brands and landlords looking to capitalize on digital and physical pop-up opportunities. We are looking forward to hearing what is top-of- mind from Linda’s perspective on pop-up retail during these interesting times.
Thought I would set the stage for pop-ups and where things stand today. The concept of pop- ups came about when the sameness factor took over malls & the retail world. This happened well before the pandemic. Think about traveling overseas & seeing the same brands there as you did locally… with the same merchandise… same old… making the experience a lackluster one.
Looking at the western world, the concept of pop-ups was strong in Europe (storefronts, airports), then the US & then Canada followed shortly thereafter. Pop-up platforms in Europe, in many ways like the precursors to pop-up go that we started 5 years ago, emerged helping brands connect with landlords by introducing new & innovative concepts to them. Service offerings include everything from marketing support to concierge services & everything in between. Some companies in the space take on specific space & serve as the landlord to manage all in a turnkey fashion & take on the risk of leasing the space. We saw that with Stories in Manhattan.
In Canada, we saw the opening Yorkdale concept was seen as bold move & had a lot of traction. Many followed. But pop-ups many landlords were still not very open to the idea.
Fast track to recent days… Lots of vacancies….Online shopping explosion… lead to many landlords including KIMCO, Simon, Macerich, Washington Prime, ShopCore have set up their own website for pop-up space vacancies to manage the process. The pop-in & marketplace concepts have been introduced by the likes of Nordstrom, Macys,
the Bay & many others as their answer to countering sameness issues. PUG is about to launch a white label offering to address this for all… including BIAs, etc.
We all know that dealing with pop-up prospects can be a daunting task. On the one hand, landlords are looking for new concepts or digital native brands that are new to brick and mortar. Often times, that means dealing with startups that are unrealistic re: budgets and other relevant details, often resulting a lot of wasted time.
So let’s look at the landlord challenges:
- Mall landlords are experiencing escalating vacancies
- Online shopping is at a record high (COVID help this trend move at 10x rate)
- In-mall foot traffic has been on the decline and although seeing some uptick post-COVID, experiential activations are what’s driving leases.
- Retail Lease terms have gone from 10 years, to 5, to less
- Consumers are looking for novel experiences, beyond simply buying product as they can do that online
And what brands want:
- Launch a new product and increase brand awareness and use physical presence as part of the omnichannel experience
- Get closer to the end consumer (DTC) brand connection
- Engage with end consumers
- Test a new market/concept (frank and Oak, Kit and Ace, as reviewed by Mario Toneguzzi
WHY do brands pop-up?
- Tried and tested way: 80% of global retail companies that have opened a pop-up store said it was successful and 58% are likely to use the tactic again.
- To reach new customers Lululemon opened 60 pop-up “seasonal stores” across North America in the past year. More than 35% of the shoppers in those outlets were new.
- Boost sales (hours to max 3 months): 10% of Lovesac Co.’s annual sales come from pop-ups.
- Increase profits. Lower risk, less square footage, a shorter rental period, and no overhead costs.Glossier Inc., the makeup e-tailer thanks their robust pop-up roll out for contributing to their more than $100 million in revenue.
- Shared on Facebook & Instagram It’s combining the best of offline and online marketing! 33% of customers use these platforms to learn about new brands.
- Provides Instant Gratification. Instant gratification has become an expectation, and the norm rather than the exception. A pop-up shop meets that need and gives visitors the option to try out new products firsthand.
- Generates Word-of-Mouth Interest. People are inclined to trust the word of their friends and family. In fact, according to Nielsen 92% of consumers believe suggestions from their loved ones more than advertiser. It’s easier to generate that word-of-mouth buzz with a unique pop-up shop that gives people a reason to talk about you.
- 32% of brands say they’ll be establishing or expanding their use of pop-up and in-person experiences in the next year.
- 40% of brands say offering experiential retail would be a top priority for them in the next year, but 57% of them say coordinating it will be a top challenge.
- 46% of brands are investing in showrooming over the next year to improve the in-store experience.
- 32% of consumers say they’re likely to engage with in-store experiential moments.
- In the last year, 47% of consumers were more likely to purchase from a brand due to its local presence.
- In the US, 81% of Gen Z consumers prefer to shop in stores to discover new products and more than 50% say in-store browsing is a way to disconnect from the digital world.
- More than one-third of consumers in the UK, Australia, and New Zealand say a sense of community is a top motivator to visit local shops.
- 34% of consumers are likely to engage with appointment shopping in 2022.
- Integration of technology to drive the experience-smartphones are always a consideration
- Outdoor pop-ups, mobile pop-ups and the use of windows – tech use (AI, QR codes)
- Immersive experiences like Van Gogh and Avengers (precursor: Christo and his many
installations including the Gates in New York)
- Instagrammable experiences also continue to trend like Winky Lux and Lego - charge
entrance and not selling anything
- Food - Still very strong but now geared more towards ‘take out’ and ‘ready-to-reheat’ for ease of popping-up, accessories, cosmetics, more food… and integration of sensorial components (think bake shop.. old fashion but works).
- Invite only pop-ups further increasing FOMO. Social media/influencer integration
- Thematic, Inclusivity Collabs continue to be strong
- Food + Beauty collabs are very big
- Unique collabs, when successful online are then branching out to physical retail via popups, including local, homegrown
- TV Show + Movies
The old is the new and the new is the old but the common goal is revitalization and telling the story!