International niche and luxury retailers flocking to downtown
Retail property investment in Vancouver reached more than $2.8 billion in the first half of this year, according to new numbers from CBRE Canada.
The first half of this year marked the highest retail property investment numbers on record, with total retail investment surpassing 2016’s full-year total of $1.6 billion — a 75 per cent jump, the report said.
Meanwhile, downtown Vancouver storefront vacancies fell to 2.9 per cent as international brands have increasingly been driving demand for retail space in the city’s shopping core, and especially so in the Alberni Street luxury district and in Gastown, it said.
“Generally, there is a correlation between retail and population growth, which we’ve seen in Vancouver,” said Martin Moriarty, associate vice-president of retail leasing and investment with CBRE in Vancouver. “I think we’ve also seen demand in the sector of luxury retail in Vancouver specifically,” he told The Vancouver Sun.
On Robson Street, five major international brands opened stores in the past year or announced they will be opening soon, including Muji from Japan, Bailey Nelson from Australia, Laduree from France, Nike from the U.S. and the Vancouver-based athletic wear designer, Reigning Champ.
Japanese retail giant Muji is opening its largest North American store on Robson. The 16,000-square-foot store is expected to open later this year.
Meanwhile on Alberni Street, the new high street for prestige brands, sales have passed Toronto’s Bloor Street, with rents climbing up to 50 per cent higher than on nearby Robson Street, the report said.
More new stores are entering the market including Van Cleef & Arpels, the French jewelry, watch and perfume brand, and Hublot, the Swiss luxury watch brand.
“Alberni Street has transformed into the luxury corridor,” Moriarty said. “We have done probably 95 per cent of the deals up and down the street and there is a lot of excitement by the luxury retailers to be in Vancouver. A lot of that is based upon what they’ve heard in terms of sales, but by competitors or subsidiary brands.”
Gastown is also experiencing a shopping resurgence with international retailers such as Cos and Filson opening locations this year, and a second Bailey Nelson location to open soon, he said.
Vancouver-based Herschel Supply Co., a retro backpack maker, plans to open a 5,000 sq.-ft flagship store next year in Gastown, another boost for the neighbourhood.
“They’re shifting toward slightly younger, more vibrant retail down there (in Gastown), and part of that is driven by the nature of the buildings,” Moriarty said. “A lot of international real estate teams come out and say, ‘Wow, this is similar to a precinct of New York or this part of London’.”
He said innovative brands such as local success stories Aritzia, Lululemon and Indochino are focusing more on customer experience and in-store education, while legacy big-box retailers like Sears disappear, earning ugly headlines in the process.
Shopping centres are changing too. “If you go to a shopping centre today, whether it’s Park Royal or Richmond Centre, you expect to be entertained and to dine and there’s beverage and there’s fitness, so it’s kind of becoming more of an immersive experience,” Moriarty said.
A lot of global capital is seeking robust retail and property markets, said Craig Patterson, a retail consultant and editor-in-chief of Retail Insider. “I think Vancouver is considered to be one of those top markets,” he told The Sun.
“Alberni Street is shaping up to become one of North America’s top luxury shopping areas,” Patterson said.
Patterson’s Retail Insider has noted that there has been a polarization in Canada’s retail scene with the closure of hundreds of mid-priced stores in recent years, including Mexx, Smart Set, Jacob, Petcetera, Esprit and Target Canada. More recently, others have followed, including Tip Top Tailors, HMV Canada, Shoes.com and now Sears.
It’s the low-end and high-end that seem to be gaining ground, he said.
“Gastown is really finding its place again as being an interesting, cool, hip shopping area, and we’re seeing a lot of interesting retailers opening there as well,” Patterson said.
Moriarty said he expects the downtown retail vacancy rate to remain low. “I would say if it could hover anywhere near this — or under five per cent in the short to midterm — that’s staggering by way of global comparison,” he said.
“We’ve all heard talk of e-commerce eliminating traditional, physical retail in a decade or two, but the reality is that e-commerce commanded only 2.2 per cent of sales in Canada in 2016,” Moriarty said.
“This is not the death of retail, but rather a renaissance.”