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Business brisk at Canada's top mallsThursday, July 31, 2014 > 09:35:44
(The Star Phoenix)
While big box retailers like Target have struggled to gain a foothold in Canadian markets, demand for luxury retailers is strong and fuelling massive expansion projects at shopping malls across the country.
According to research by commercial real estate company CBRE Group, more luxury retailers are predicted to arrive in Canada, albeit at a more moderate pace compared to the flurry of activity seen in the last three years.
The aftermath of the 2008 financial crisis and recession spurred a boom in retail development with foreign retailers, primarily American ones, turning their sights to Canada and construction hasn't kept up with demand.
There is little to no vacancy in highly sought after shopping centres and neighbourhoods, according to CBRE's head researcher Ross Moore.
"We just don't have empty retail to speak of. Across the country malls are generally full. If you're a Spanish or Italian or U.S. retailer, you are going to be put off by that. Supply is the key. Until we build more that's going to be a challenge."
The study, which measured the number and type of retailers that set up shop in 2013, found that luxury and high-end fashion brands constitute the majority of new arrivals in Canada.
Newcomers in the jewelry, designer fashion and accessories categories are driving the demand for additional retail space.
In the cities, where most of Canada's top income earners reside, construction cranes are busy: In Vancouver, the Pacific and Oakridge Centres are getting bigger (adding 578,000 square feet and 373,000 square feet respectively); Calgary's Chinook Centre is expanding (140,000 square feet) as well as Ottawa's Rideau Centre (230,000 square feet).
In Toronto, top-tier malls Yorkdale and Sherway Gardens are simultaneously undergoing multimillion-dollar expansions to accommodate the upscale U.S. department store Nordstrom.
CBRE's Moore predicts that malls in major markets will keep seeking opportunities to expand, but construction will level off to a more steady pace in coming years as developers and supply chains need time to adjust to the influx of brands.
He adds that shopping centres in major centres focused on becoming retail "destinations" will continue to court niche luxury boutiques by reconfiguring existing space once occupied by retailers like Sears Canada, which shuttered several of its flagship stores this year.