ANALYSIS: RETAIL Jay de Nance Director of Tenant Services, Fairfield Commercial Real Estate Inc. In total, Calgary has just over 33 million sq. ft. of retail, with a 2.75 per cent overall vacancy rate as of January 2015. Brookfield Place Inglewood Destination: Deerfoot City Transition time Consumer demand propels changes in retail property sector <strong>THE</strong> CALGARY RETAIL sector is a powerhouse, even in the current economic climate. Despite fluctuating oil prices, retail space will continue to enjoy stable rent, low vacancy and robust development. This is driven by population growth and that fact that the city’s retail environment is far from oversaturated. Calgary has 23.5 square feet per capita of retail space, below the national average of 23.7 sq. ft. In total, Calgary has just over 33 million sq. ft. of retail, with a 2.75 per cent overall vacancy rate at the start of 2015. Enclosed malls account for 21.3 million sq. ft., with power centres, grocery-anchored strip centres, lifestyle centres and other retail venues making up the balance of the space. Transition is a common theme in retail real estate, as aging and underperforming retail environments are repurposed and redeveloped. This provides a unique opportunity to revitalize shopping centres, with new retailers providing an updated tenant mix. Out with the old… … And in with the new. It’s a trend in Calgary’s downtown development market segment — one that Brookfield Asset Management looks to continue with Brookfield Place, a full-block development between 1st and 2nd streets and 6th and 7th avenues S.W. The site where the Calgary Herald building once stood will soon be home to the 2.4-million-sq.-ft. two-tower project, which will include retail, restaurants and amenities at street level. At 247 metres, its east tower will be the tallest downtown office building in western Canada. Another example is Cadillac Fairview’s Calgary City Centre at 3rd Avenue and 2nd Street S.W. Phase I includes an 853,032-sq.-ft. 36-storey office tower with a retail podium and five levels of underground parking. Occupancy is expected in early 2016. Densification continues As the city continues to shift from suburban sprawl to inner-city density, many mixed-use projects are under construction or in the final planning stages. Owners of these developments are seeking strong retailers and food-service operators who will flourish in pedestrian-oriented environments. Inner-city retail space is in high demand, with current hotbeds including Kensington, the Beltline, East Village, 17th Avenue S.W., Mission, Marda Loop, Inglewood and Bridgeland. Older malls reborn The enclosed shopping centre sector continues to be competitive. Chinook Centre, Market Mall, Southcentre and the Core are at the forefront of this battle, competing for Calgarians’ discretionary income. But while many centres are ultra-successful, some are tired and underperforming. This has become an opportunity to redevelop and create new, unique retail environments. A mix of retail and food service tenants combined with inviting public spaces is breathing new life into these older centres. One example is the reinvention of Deerfoot Mall, at Deerfoot Trail and 64th Avenue N.E., as Destination: Deerfoot City. The facility will transform from an enclosed mall into an expanded hybrid shopping centre. Retail space will increase from 623,000 sq. ft. to about 1.3 million sq. ft. by the fall of 2017. Anchor tenant Cabela’s Inc. will occupy a 70,000-sq.-ft. location. Wide open spaces Decisions by Target Corp. to close its 133 Canadian stores and by Best Buy Co. Inc. to shutter 66 Future Shop stores is having an impact on “big-box” retail centres. The recycling of these stores is the largest retail remerchandising and re-leasing event in Canadian history and will likely take several years to complete. This presents unique opportunities for non-retail users as well as established large-format retail brands. Meanwhile, expansion and renewal continue across the region. There are currently 50-plus new retail projects pre-leasing, under construction or in the final planning stages that have the potential to add approximately 14.5 million sq. ft. to the area marketplace. Calgary’s shopping centre and retail store network is an ever-evolving component of the city’s infrastructure, and it will continue to surge ahead. ■ 30 BOMA CALGARY BUILDING GUIDE 2015-2016
2 CALGARY LOCATOR 2 FORT MCMURRAY 2 N 16 PRINCE RUPERT SEAPORT EDMONTON 2 16 N 16 RED DEER 2 Calgary Building Listings and Maps VANCOUVER BANFF 1 CALGARY BRITISH COLUMBIA 2 1 1 MEDICINE HAT REGINA SASKATCHEWAN LETHBRIDGE 3 3 CANADA U.S.A./MEXICO The pulse of Calgary’s commercial real estate industry TM 31