C algary’s retail real estate market is on a strong course due primarily to continued growth in retail sales and downward trend in unemployment. Retail sales in Alberta increased by 7.4% to $5.24 billion for April 2011 on a year to year basis. Alberta’s average weekly earnings remain the highest of all provinces at $1,036, substantially higher than the national average of $877. A recent report released by KubasPrimedia also found Calgarians to be the most optimistic in the country, with 60% of consumers stating that the economy is improving. While rising food and gasoline prices have cooled consumer spending, solid economic fundamentals have translated into low vacancy and vibrant market activities. Competition between US and Canadian retailers has translated into takeovers and consolidations. While possibilities exist for the closing of selected store locations due to market coverage duplication, tenant demand exists to absorb any available space. While the expansion of large US retailers into the local market place is certainly a factor, Canadian retailers are also playing a huge part. Strong retail sales activity has translated into high demand for quality retail space. The demise of brick and mortar video stores has been well documented, evident in the downsizing of Rogers Videos and closing of Hollywood Videos. With Blockbuster Canada in receivership, up to one-third of all locations are expected to close with 7 announced for Calgary. The resulting vacancies present additional opportunities for retailers, with many of the locations having been snapped up by tenancies such as financial institutions, Bulk Barn and Sherwin Williams. In May, Tiffany & Co. opened its first store in Calgary; its fourth location in Canada. The 4,100 square feet store in Chinook Centre’s newly expanded wing is just yet another indication of Calgary’s growing global recognition as a luxury retail destination. The market is also upbeat in the Calgary Retail Outlook 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 4,500 4,600 4,700 4,800 4,900 5,000 5,100 5,200 5,300 5,400 January-08 February-08 March-08 April-08 May-08 June-08 July-08 August-08 September-08 October-08 November-08 December-08 January-09 February-09 March-09 April-09 May-09 June-09 July-09 August-09 September-09 October-09 November-09 December-09 January-10 February-10 March-10 April-10 May-10 June-10 July-10 August-10 September-10 October-10 November-10 December-10 January-11 February-11 March-11 April-11 U N E M P L O Y M E N T R E T A I L S A L E S Alberta Retail Sales and Unemployment Rate Retail Sales ($000,000) Unemployment Rate (%) Retail Sales Trendline Sources: Statistics Canada, Government of Alberta 8,800 9,000 9,200 9,400 9,600 9,800 10,000 10,200 10,400 4,500 4,600 4,700 4,800 4,900 5,000 5,100 5,200 5,300 5,400 January-08 February-08 March-08 April-08 May-08 June-08 July-08 August-08 September-08 October-08 November-08 December-08 January-09 February-09 March-09 April-09 May-09 June-09 July-09 August-09 September-09 October-09 November-09 December-09 January-10 February-10 March-10 April-10 May-10 June-10 July-10 August-10 September-10 October-10 November-10 December-10 W A G E S / S A L A R I E S R E T A I L S A L E S Alberta Retail Sales and Wages & Salaries Wages and Salaries ($000,000) Retail Sales ($000,000) Sources: Statistics Canada, Government of Alberta food and restaurant sector. Five Guys Burger & Fries has plans to open 8 or more locations in Calgary, while Buffalo Wild Wings, the Zagat ranked number 1 US sports bar, will open its first restaurant in 2012. Other companies on the expansion front include Good Earth, Dollarama, Báton Rouge, Pet Valu and Cora’s Breakfast & Lunch. In the downtown core, Stephen Avenue has been reinvigorated as a safe and pleasant pedestrian outdoor mall. Both the variety and quality of retailers have improved, evident through renovation projects such as The Core, Venator (adjacent to Scotia Centre), and facelift of the King Henry VIII pub building next to Flames Central. 2.0% 1.7% 1.7% 1.4% 3.9% Overall NE NW SE SW Calgary Retail Q2 2011 Vacancy Rates (39.1 Million SF) (7.7 Million SF) SF) SF) (9.7 Million SF) (9.1 Million SF) (12.6 Million SF) The Retail Report Mid-Year 2011 FOCUS: Beacon Heights US Retailer Expansion Future Projects: Stampede Trail What’s on the Horizon
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Calgary’s retail real estate market is on a strong course due primarily to continued growth in retail sales and
downward trend in unemployment. Retail sales in Alberta increased by 7.4% to $5.24 billion for April 2011 on a year to year basis. Alberta’s average weekly earnings remain the highest of all provinces at $1,036, substantially higher than the national average of $877. A recent report released by KubasPrimedia also found Calgarians to be the most optimistic in the country, with 60% of consumers stating that the economy is improving. While rising food and gasoline prices have cooled consumer spending, solid economic fundamentals have translated into low vacancy and vibrant market activities.
Competition between US and Canadian retailers has translated into takeovers and consolidations. While possibilities exist for the closing of selected store locations due to market coverage duplication, tenant demand exists to absorb any available space. While the expansion of large US retailers into the local market place is certainly a factor, Canadian retailers are also playing a huge part. Strong retail sales activity has translated into high demand for quality retail space.
The demise of brick and mortar video stores has been well documented, evident in the downsizing of Rogers Videos and closing of Hollywood Videos. With Blockbuster Canada in receivership, up to one-third of all locations are expected to close with 7 announced for Calgary. The resulting vacancies present additional opportunities for retailers, with many of the locations having been snapped up by tenancies such as financial institutions, Bulk Barn and Sherwin Williams.
In May, Tiffany & Co. opened its first store in Calgary; its fourth location in Canada. The 4,100 square feet store in Chinook Centre’s newly expanded wing is just yet another indication of Calgary’s growing global recognition as a luxury retail destination. The market is also upbeat in the
Calgary Retail Outlook
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food and restaurant sector. Five Guys Burger & Fries has plans to open 8 or more locations in Calgary, while Buffalo Wild Wings, the Zagat ranked number 1 US sports bar, will open its first restaurant in 2012. Other companies on the expansion front include Good Earth, Dollarama, Báton Rouge, Pet Valu and Cora’s Breakfast & Lunch. In the downtown core, Stephen Avenue has been reinvigorated as a safe and pleasant pedestrian outdoor mall. Both the variety and quality of retailers have improved, evident through renovation projects such as The Core, Venator (adjacent to Scotia Centre), and facelift of the King Henry VIII pub building next to Flames Central.
2.0% 1.7% 1.7% 1.4%
3.9%
Overall NE NW SE SW
Calgary Retail Q2 2011 Vacancy Rates
(39.1
Million SF)
(7.7 Million
SF)
(813,000
SF)
(813,000
SF)
(9.7 Million
SF)
(9.1 Million
SF)
(12.6
Million SF)
The Retail Report Mid-Year 2011
FOCUS: Beacon HeightsUS Retailer Expansion Future Projects: Stampede Trail What’s on the Horizon
include health-oriented retail, restaurants and a hotel, amongst others. The proposal takes advantage of the opportunity to monetize underutilized lands to take advantage of Calgary’s favourable retail real estate market.
In East Village, the vision to transform this long neglected area into an urban village continues to take shape. In February, Calgary Municipal Land Corporation announced a major land development deal for approximately 600,000 square feet of mixed use multi-family and retail. Combined with a previous announcement from October 2010, a total of $600 million will be invested into mixed use development in the area. This brings new retail opportunities in the heart of the city, along with desirable demographics associated with multi-family developments.
The US Retailer Expansion
Future Projects
The trend of US retailers entering the Canadian market through expansion or takeovers can be
attributed to a number of factors. Particular incentives include Canada’s proximity to the US market, a common language, and strong economic fundamentals. Scarcity in quality Canadian retail real estate has led to strategic acquisitions by US retailers. Walmart’s acquisition of 120 Woolco stores in 1994, and Best Buy’s acquisition of Future Shop in 2001 are two prime examples. This is a direct reflection of the high value of retail properties in Canada.
Target, the number 2 US retailer’s $1.83 billion takeover of Canadian leases on 220 Zellers locations certainly attracted attention in January. Target has subsequently announced the first 105 Zellers locations slated for conversion (including 6 in Calgary) with up to $10-million planned for the remodelling and renovation of each selected location. Another notable entry into the Canadian market is the purchase of Calgary based Liquidation World by Big Lots Inc., a US closeout retailer with 1,405 stores. The transaction provides Big Lots with exposure to the Canadian market with Liquidation World’s existing 92 locations across the country, including 3 in Calgary.
Other large US retailers without a Canadian presence with potential expansion plans include Nordstrom, J.C. Penny, Kohls, Walgreen, and Macy’s, while rumoured potential targets include Jacob and Reitmans. Partly in response to potential cross boarder competition, Canadian Tire announced its purchase of Calgary based Forzani Group in May.
Beacon Heights Shopping Centre is a new 10-acre power centre located adjacent to Beacon
Hill Centre in Northwest Calgary. Easily accessible
FOCUS: Beacon Heights
via Sarcee Trail and Sherwood Boulevard NW, immediate surrounding communities include Sherwood, Hamptons, Citadel, and Spy Hill. Anchor tenants include CIBC and Optics International, with neighbouring tenants including Canadian Tire, Costco, Golf Town, Home Depot and Future Shop, amongst others. The development has a primary trade population of 175,000 with a secondary trade population of 300,000. The extension of Sarcee Trail to 144th Avenue is expected to encourage future residential developments in the area, in turn benefiting commercial developments in the region.
AVISON YOUNG The Retail Report - Mid-Year 2011
A critical part of the Calgary Stampede Park expansion and redevelopment, the Stampede Trail development will add 150,000
square feet of retail space situated in the heart of Stampede Park. Stampede Trail is developed by Alberta Development Partners with Avison Young acting as the exclusive leasing agent. Leasing activity has really picked up since latter 2010 and the momentum has carried on through 2011. An announcement for construction could potentially take place in late 2011, early 2012.
WinSport’s proposed retail/commercial development will add approximately 400,000 square feet of retail space at the Canada Olympic Park. Subject to city approval on changes to the COP area structure plan, WinSport is hopeful for construction to begin in 2012. Preliminary plans
Beacon Heights - Architect’s rendering
Stampede Trail - Architect’s rendering
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Sources: Statistics Canada
AVISON YOUNG The Retail Report - Mid-Year 2011
© 2011, Avison Young Real Estate Alberta Inc. The information contained herein was obtained from sources deemed reliable and, while believed to be correct; is not guaranteed by Avison Young.
Site Sites Developer Est. SF Timing
1 The District at North Deerfoot Melcor 94,000 Proposed
2 Bingham Crossing Rencor 300,000 Proposed
3 Stonegate WAM / AIMCo 1,500,000 Phased
4 Jacksonport Trinity 1,000,000 Phased
5 Skyview Town Centre (Country Hills Blvd. NE) LaCaille Group 500,000 Phased
6 Easthills Trinity 880,000 Phased
7 Deerfoot Meadows Village Ivanhoe Cambridge 300,000 Proposed
8 South Trail Shepard Development 60,000 2011 +
9 Mahogany Hopewell 350,000 Phased
10 Auburn Bay Brookfield 60,000 2013 +
11 Seton Brookfield 703,000 Phased
12 Gates of Walden Royop 68,000 2011 +
13 Legacy West Creek 700,000 Proposed
14 NWC Macleod Trail / 210th Avenue SW IKO 300,000 Proposed
15 Silverado Marketplace Ronmor 106,000 2011 +
16 Silverado Square Axis 100,000 Proposed
17 7337 Macleod Trail SW Telsec 75,000 2011 +
18 Currie Barracks Canada Lands Corp. 200,000 Proposed
19 Crestmont Qualico 400,000 Proposed
20 Sweet Lands Melcor 400,000 Proposed
21 Bow Valley Crossing Loblaws 700,000 Proposed
22 Greenbriar Melcor 51,000 Proposed
23 Canada Olympic Park Trinity 400,000 Proposed
24 Stampede Trail Alberta Development 180,000 2014 +
25 Royal Oak Park Certus 74,000 2011 +
26 Beacon Heights Cidex 140,000 2010 +
27 Sage Hill RioCan 300,000 2012 +
28 Sage Hill Farm LaCaille Group 100,000 Proposed
29 Creekside Hopewell 50,000 2011 +
30 Evanston Towne Centre Qualico 136,000 2011 +
31 Keystone (Stoney Trail / Harvest Hills) Brookfield 1,000,000 Proposed
32 Gates of Panorama Royop 59,000 2011 +
33 Elbow Valley Hopewell 94,000 Proposed
34 CrossIron Commons Ivanhoe Cambridge 411,000 Phased
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Calgary Retail Market - New Developments
Bruce Bynoe [email protected]
Jeff McGinley [email protected]
Amela Palić [email protected]
Alex Mandolidis [email protected]
Doug Johannson [email protected]
Jaclyn Snell [email protected]
Pali Bedi [email protected]
Fred Clemens [email protected]
AY CALGARY RETAIL TEAM
AY CALGARY BUSINESS CONDOMINIUM TEAM
AVISON YOUNG The Retail Report - Mid-Year 2011
AVISON YOUNG FEATURED RETAIL LISTINGS For full brochures, please visit us at: www.avisonyoung.com
Stampede Trail Up to 180,000 Sq. Ft. Mixed Use Retail Development Retail Leasing Opportunities
6404 Bowness Road NW 4,436 Sq. Ft. Neighbourhood Retail StripRetail Leasing Opportunity
Sierra Springs Up to 256,000 Sq. Ft. Airdrie’s 43 acre Retail Development Retail Leasing Opportunities
608 - 7th Street SW New Proposed Office Bldg
Main: 2,300 SF & Plus 15: 7,500 SFDowntown Retail Opportunities
Beacon Heights 2,000 - 35,000 Sq. Ft. 10 acre Retail Power Centre Retail Leasing Opportunities
8303 Fairmont Drive SE 3,700 Sq. Ft. Acadia Shopping Centre Retail SubLease Opportunity
6311 Centre Street S14,518 - 22,000 Sq. Ft. Suburban Retail Head Lease Opportunities
Crowfoot Village1,299 - 4,090 Sq. Ft. Within Crowfoot Towne Centre Retail Leasing Opportunities
© 2011, Avison Young Real Estate Alberta Inc. The information contained herein was obtained from sources deemed reliable and, while believed to be correct; is not guaranteed by Avison Young.
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