Luxury, Small Spaces and Mixed-use Trending in Rapidly-Expanding Retail Market
With some fifteen new retailers looking at entering the Canadian market through Calgary, the competition for good high-traffic locations in populated areas with dependable labour is becoming fierce.
The demand is strong both from the United States and internationally, and what that does is ultimately adds a ripple effect of strong demand propping up rental rates,” says Darryl Schmidt, Vice President for National Leasing with the Cadillac Fairview Corporation Limited. “When we get fresh, new to market retailers that customers respond to, it has a positive effect on sales productivity levels in the top tier shopping centres and that buoys up rental structures within the city…If you don’t have a retail platform that is international in scope and scale, you’re going to have a very difficult time competing.”
Established players have to prove that they can continually attract discerning consumers faced with more options for their time, while facing bigger constraints from landlords.
To be competitive in the urban landscape in downtown Calgary, we might have to go a little bit smaller and we might have to get creative and sacrifice on back of house, storage or even seats,” said Lec Mroczek, Manager, Real Estate & Development for Tim Hortons. “We have landlords out there that are choosing new and sexy concepts new to the marketplace. Tenants take a smaller format space and smaller square footage, but they’re going to pay much higher rent. A lot of landlords, not only institutional landlords but smaller landlords too, are going in that direction. So we rely a lot on our relationships to continue to grow in the market.”
Tim Hortons is also reworking their traditional concept to attract current customers. One new upmarket design features softer seats, a modern exterior and healthy menu choices, like that underway in the Bridlewood Community in South West Calgary.
That move to smaller or more luxurious offerings is typical of successful moves in the market, says Schmidt.
“You’re really seeing the middle market being squeezed out with retail concepts going to one or two extremes. They’re either going to a value proposition and lower price points, in which case they need larger box formats to deliver the number of SKUs in the experience, or you’re getting a swing to a higher price point, almost aspirational luxury in more boutique-y formats.”
This article appeared on p 46 of Canada’s Leading Real Estate Forum, Ottawa, Fall 2012.
