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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.


Foreign retailers finding little room for setting up shop in Calgary

Monday, September 08, 2014 > 09:27:37

(Calgary Herald)

International, American and Canadian-based retailers are now recognizing the strong market fundamentals that are prevalent in Calgary but demand for premium locations often outstrips supply resulting in competitive bidding for superior streetfront and suburban locations, says a new report by Avison Young.

The commercial real estate firm’s mid-year retail market report said retailers have shown a sustained interest in Calgary as the city’s economy over the past six months continued to be the envy of Canada.

“The optimism and appeal of the Calgary retail market can be directly attributed to Calgary’s low unemployment rate, optimistic business outlook, expanding population and one of the highest weekly earnings rate in Canada by a significant margin,” said the report. “Calgary remains a very aggressive retail market place. Though streetfront vacancies are up slightly due to new product being delivered in the inner city, city-wide based vacancies have remained relatively constant at approximately three per cent.”

Ryan Rutherford, senior associate in retail with Avison Young, said Calgary’s retail market has been pretty consistent over the last two or three years with a very low vacancy rate.

He said many U.S. brands like a lot of things about the Calgary and Alberta markets and they are very surprised when they expand here at how tight space is in the market and at the level of competition in the industry.

“Retail sales is the number one thing. We are the top retail sales in Canada. We keep growing year over year,” said Rutherford.

“Also we have a lot of disposable income. Young population. The economy really didn’t get hurt here as much as anywhere else . . . U.S. retailers just can’t grow in the U.S. like they can here because of the economy down there. So this is a great place for them to grow. So we’re seeing a big demand from them and I guess there’s a bit of pressure on Canadian retailers because these American (retailers) are coming on so strongly.”

The report said that landlords are intentionally holding back vacant space as they reposition their centres and this is also contributing to the low vacancy rate in Calgary.

At the end of June, the retail vacancy rate in the city was three per cent, up from 2.9 per cent a year ago. About half a million square feet of new inventory was added to the market over the past year, which now totals 37.78 million square feet.

“Most expanding retailers want the best retail possible, in the strongest demographic areas of the city,” it said. “Young, highly-educated individuals with strong incomes and equally strong disposable incomes are where they want to plant their flags. This describes most of Alberta but in particular areas like Shawnessy, Signal Hill, Crowfoot, Royal Oak, Beacon Hill, Mission, 17th Avenue and 4th Street S.W. all have ‘bulls’ eyes’ on them. As a result, these areas have virtually no vacancy.

“Retailers must be exceptionally patient and have the ability to react quickly when opportunities arise. Demand is also exacerbated by the combination of market conditions and land-use in place but not enough population in the right places to justify building new retail inventory.”

It said the West side of the city traditionally has a higher income base than the East and therefore a higher demand, but a shortage of land hampers additional development.

“There are additional issues with service capacity, some proposed roads may be delayed, interchange funding must be resolved and sanitary sewer upgrades performed,” it said.

Avison Young said the majority of new projects are in the Neighbourhood Shopping Centre format, which are typically anchored by major food stores and tend to follow areas of residential growth. These new developments will collectively contribute 977,000 square feet of new retail product to Calgary while new streetfront format retail will add 233,000 square feet from this fall to the summer of 2016.

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