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EDITORIAL: Discerning shoppers drive mall construction boom


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August 1, 2014 by CORINNE LYNDS

Steel-toe boots and safety vests are about as deep as we typically delve into the wonderful world of fashion here at On-Site. However, since affluent Canadian shoppers are fueling a mall construction boom, it seems only prudent that we take a closer look at this demand for designer labels.

While big box retailers like Target struggle to gain traction north of the border, demand for luxury retailers is stronger than ever—driving major expansion projects at shopping malls across the country, according to a recent study conducted by commercial real estate company CBRE Canada.

Following the 2008 financial crisis, the recession led to a boom in retail development with foreign retailers—initially American ones that turned their sights to Canada. Construction simply has not kept up with demand since then. As a result, there is little to no vacancy in highly sought after shopping centres and neighbourhoods, says CBRE’s head researcher Ross Moore.

The study, which measured the number and type of retailers that setup shop in 2013, discovered that luxury and high-end fashion brands constitute the majority of new arrivals in Canada. Newcomers in jewelry, designer fashion and accessories categories are driving demand for additional retail space.

In Vancouver, the Pacific and Oakridge Centres are getting bigger (adding 578,000 sq. ft. and 373,000 sq. ft. respectively); Calgary’s Chinook Centre is expanding (140,000 sq. ft.) as well as Ottawa’s Rideau Centre (230,000 sq. ft.).

In Toronto, Yorkdale and Sherway Gardens are both undergoing multi-million-dollar expansions to accommodate a new anchor tenant, the upscale U.S. department store

Nordstrom. For Yorkdale, it’s the second expansion in four years. In 2012, the mall underwent a $220-million renovation, adding 145,000 sq. ft. The new wing, set to open in 2016, will add an additional 298,000 sq. ft.

Moore predicts that malls in major markets will keep seeking opportunities to expand, but construction will level off in coming years. He also points out that Canadian malls tend to be more productive than their U.S. counterparts, with sales per sq. ft. averaging $600 vs. $450 (Canadian) in the U.S.

Talking designer shoes and handbags might be a bit unusual for contractors, but shopping habits that lead to big construction jobs and beating the U.S. in productivity—well that’s worth taking note of.


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