Metro malls among the country’s big sellers
Industry much healthier in Canada than in the U.S., report says
Three Metro Vancouver malls have been ranked in the top 10 most productive Canadian shopping centres in a new report released by the Retail Council of Canada.
The report ranked 30 of Canada’s top shopping malls based on sales per square foot, overall size and pedestrian counts.
Toronto’s Yorkdale Shopping Centre topped the list with sales per square foot of $1,650. Vancouver’s Oakridge Centre was second in the country at $1,537 sales per square foot, Pacific Centre ranked third ($1,523) and Metropolis at Metrotown in Burnaby ranked eighth ($1,035).
Overall, the report ranked Vancouver as having the most productive malls in Canada, averaging $1,019 in sales per square foot per capita. Toronto trailed only Vancouver at $860 per square foot.
When compared to other Canadian cities, Vancouver has less shopping mall space per capita, as well as a median household income of $76,040, which trailed every major Canadian city except for Toronto and Montreal, said Craig Patterson, a Canadian retail expert commissioned by the RCC to write the report.
“We’ve seen fewer shopping centres in the Lower Mainland, but the shopping centres that are there are often quite strong,” he said in a recent interview.
In Vancouver, the trophy malls are boosted by a high-spending clientele, he said.
“The population is shopping, and it’s a group that’s willing to spend money on products,” Patterson said. “Sometimes it’s not how much money people make, it’s how they spend it.”
Diane Brisebois, RCC’s president and CEO, said Vancouver has a lot going for it.
“It’s a very stable economy. Even though the average wages are maybe a bit lower, they are very stable. People can find work,” she said.
“There is also a fairly sizable proportion of the population that is very wealthy. And you get a constant tourist traffic, and in most cases these are tourists who spend and they often spend on luxury brands.”
Brisebois said the biggest surprise from the report is that Canadian malls were shown to be more productive than malls south of the border.
The report says Canadian malls achieved average sales per square foot of $744, compared with $620 per square foot south of the border. That’s despite Canada having an average household net-adjusted disposable income per capita of $40,579 versus $54,690 in the United States.
Brisebois said those findings suggest Canada has the right amount of shopping mall space while the U.S. appears to have too much.
“In Canada, we seem to have been able to find the right balance,” she said.
But malls in secondary markets are struggling across North America when compared with trophy centres like Pacific Centre, West Edmonton Mall and Yorkdale, she said.
“That’s being felt right across North America. It’s not just Canada and it’s not just Greater Vancouver,” she said.
She blamed the problem on increased urbanization and a flight to big city malls by key anchor retailers.
“It’s been very, very difficult for secondary malls to attract the kind of banners that are required to bring the traffic in and increase productivity,” she said.
Patterson said Canada has less shopping mall space per capita than the United States at 16.5 square feet in Canada compared to 23.6 square feet in the U.S. He said vacancies in malls have become a problem south of the border.
“With a lot of vacancies in a shopping centre, people are coming in and it’s a psychological thing,” he said.
“It’s like if there’s a big lineup at a restaurant, you’re like: ‘Oh it must be good,’ and if it’s dead, you’ll think: ‘What’s wrong with this place?’ ”
He said the problem has led to a website called deadmalls.com, devoted to sharing information on struggling American shopping centres.
“In Canada, we have far fewer of those (empty malls),” he said. “Our shopping centres are often quite full, they’re doing higher sales per square foot on average, and Canadian landlords, I would say, have been investing more in their properties to make them better.”
From an investment point of view, trophy shopping centres in Vancouver rival the top office towers and hotels, said Mike Gill, a principal with Avison Young in Vancouver.
“Generally, these marquee shopping centres — the likes of Yorkdale and Pacific Centre and Oakridge — would command a slight premium over a class-A or triple-A office building, so I would rank those assets kind of at the top of the heap,” he said.
“These are bulletproof investments. … They’re on a lot of land. What makes one more successful over the others is tenant makeup, and it’s the particular location it’s in.”