Property Biz Canada
Power to the People When It Comes to Future Vancouver Retail
Property Biz Canada
Tue Jun 26 2012
Suburban and ex-urban retail development, where land is relatively cheap and abundant, is easy. Not so in land-scarce Vancouver, where increasingly developers and retailers are being forced to make significant compromises to community groups and local governments. Developers will make whatever deals are necessary because downtown is the place to be for far-sighted retailers said panel speakers at the Vancouver chapter of NAIOP breakfast presentation on June 21.
“The future of retail growth is really in the urban concept,” said Chris Wood, Principal of Northwest Atlantic. Densely populated areas bring with them increased consumer demands reflective of everything from technology changes to economics that crimp disposal income. Consequently developers and those leasing properties have to balance the concessions of urban intensification with retail’s requirements.
It is easier today to plan and build a large-scale retail development where there is ready access to land both for construction and parking, said Anthem Properties’ Vice-President of Business Development, R.G. (Bob) Tattle. That is not the case however in the more heavily populated parts of Metro Vancouver he explained.
Available sites, both new or those being redeveloped, are a compromise of what the neighbors and the city want. At the end of the day the developer is selling property to the retailer and it has to fit with what the retailer’s want too, said Tattle. The cost of doing that in areas like Vancouver where land has spiked in value is becoming an increasing concern. “The capital risk is so dramatic,” he said.
“What the developer wants is not always what the city wants. The challenge is that we have to make it work,” said John Horton, President of Shape Properties.
Internet Shopping Is Changing Retail
One of the predictions for developments in urban areas is that store size will decrease influenced by factors such as the Internet. There are growing synergies emerging as cyber shoppers use both the Internet and brick-and-mortar stores to buy.
Wood said on-line shoppers are able to order a pair of pants and shirt in three different sizes. “He will keep the one that fits and take the other two back to the store,” he said. There is also the convenience of having some items, such as a flat-screen television, delivered to the doorstep.
Tattle said that online shopping is popular because of it is “convenient” but it also caters to a differing mentality than that of the brick-and-mortar shopper. On-line shoppers are more ready to buy as opposed to the individual that moves from store to store in the retail mall looking at selections. Another synergy lies in the Internet allowing individuals to buy on-line and pick up goods at the store.
Today’s virtual or wired existence will drive consumers to the retail malls, predicted Horton, as they will still strive to make some physical connections with the goods and services they purchase. The individual may use the Internet much like a catalogue but then head to the store for a purchase. “Or, they will buy those items they can’t find in a store,” he said.
Shopping centres are also becoming a form of entertainment and a social outing that might culminates in meeting friends, browsing, or going to a movie.
Transit Site Shoppers Often Arrive By Train
Urban density is being fueled by public transit systems, especially rapid transit which in Vancouver, via SkyTrain’s Expo and Millennium lines and Canada Line, deliver shoppers literally to the doorstep of major malls, eliminating the need to find parking. At or around stations, high-rise residential structures are also being constructed, often with retail space of some kind.
Metrotown Centre, in Burnaby, sees 42% of its shoppers or visitors make trips via SkyTrain, Horton said, making retailers more conscience of being on a major rapid transit route.
Wood said the new Canada Line with its stop at Oakridge Mall has been a benefit to businesses at the shopping area as it now provides ready access to a range of products from clothing, groceries all the way to entertainment facilities. The impact has impressed retailers. “Retailers didn’t buy into it before Canada Line,” said Wood.
New Retailers Will Have An Impact
The outlook for retail space in the Lower Mainland remains strong, panel members said. Because of the challenges in getting projects approved and built, there is a lapse time in supply meeting up with demand. Horton estimated that there is now 6.5 to 7 million square feet of new retail space that will come forward in the next seven years, as the region remains under-built.
Larger stores like Target, replacing Zeller’s outlets, will bring pros and cons. On one hand, panel members said, they provide anchor tenants and competition. “Stores like Sears and Wal-Mart will have to get better at what they do,” said Horton. Yet, on the other hand, increased competition could drive some smaller stores out of business.
Ultimately the success of stores will depend upon the economic landscape.
“There are many reasons to be happy about the future of retail,’ said Tattle, especially as “Canada has done a great job economically” weathering the storm that hit the U.S. and Europe. But, the issue that remains unresolved is taxation. “We are taxed to death in Canada,” he said. Consumers will have “less and less to spend,” he predicts if the trend continues and that remains the real threat to retail outlets. “The dollar will just get smaller.”