Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/400168
REPORT Canada's retail real estate market is becoming more and more like the U.S., though some factors, such as taxes, wages and pricing will seem foreign to U.S.- based retailers seeking to set up shop there. So said a panel of top industry players at an SCTLive event titled "Catering to Canada," in Toronto, in September. The country is ripe for new retailers, panelists said, as it undergoes a redevelopment boom, with most major re- gional centers adding square footage and/or revamping existing space. The amount of retail per capita is 60 percent less in Canada than in the U.S., and the sales per square foot average is about 30 percent higher than in the U.S., said Roman Drohomirecki, co-COO and executive vice president for the central and west- ern region of Calgary–based Ivanhoé Cambridge. The country had its first American-style Black Friday on Nov. 29 last year, with doorbuster promotions and midnight sales. Retailers reported a sales boom for that day, but saw sales plunge afterward. For better or worse, the trend is teaching Canadian consum- ers to wait for discounts and sales just as American consumers do. "People are learning to buy on sale," said Harley Oberfeld, CEO of Montréal-based Oberfeld Snowcap, a retailer advisory firm represents a host of big-name chains. Canadian landlords and retailers are also adjusting to e- commerce's effect on consumer behavior. The impact has been somewhat less strong in Canada, with only 3 percent of overall sales coming from e-commerce there, versus 9 percent in the U.S., Drohomirecki said. Canadian landlords are starting to embrace e- commerce and use it more to market and help tenants promote themselves, he added. Ivanhoé Cambridge is adding Wifi capability to all of its malls. "Our traf- fic is flat, but sales are continuing to grow," he said. "People are browsing online and in coming in more focused on buying." Canadians are adopting other practices of their American peers, most notably the annual rent increase. This is uncommon in Canada, but more landlords are work- ing it into new deals, said Edward Sonshine, CEO of Toronto-based RioCan, Canada's largest REIT, with a portfolio of 344 retail properties containing some 84 million square feet. "We learned about annual in- creases from Tanger," Sonshine said, referring to his firm's joint venture with U.S.–based outlet developer Tanger Outlets. Lease lengths are getting shorter, too, and landlords are also pushing back when tenants request long-term, fixed-rent leases, Sonshine said. CAM costs are also evolving. "We may see an evolution to fixed CAM, like in the U.S.," said John Sullivan, president and CEO of Toronto-based Cadillac Fairview Corp., whose portfolio contains 43 million square feet across 73 properties. Chains that the landlords said they would like to lure to Canada include Athleta, Cheesecake Factory, Macy's and Uniqlo. SCT 14 S C T / N o v e m b e r 2 0 1 4 Now's the time for foreign chains to enter Canada, panel says Sullivan, SonShine and oberfeld Nurturing Tenants How can a shopping center help independent retailers succeed? Nov. 13, 2014 • 11:30 a.m.–2:30 p.m., Chicago Landlords and tenants discuss programs that have helped mom-and- pops fine-tune their businesses and attract more shoppers. visit www.icsc.org/sctlive for upcoming events