The Canadian Retail Real Estate Market Overview Presented for: Toronto Real Estate Forum 2013 Presented by: John G. Crombie, National Retail Director Cushman & Wakefield Ltd. john.crombie@ca.cushwake.com (416) 756-5448 December 5, 2013
RETAIL SERVICES RETAIL IN CANADA Basic Facts In 2012, retailers sold an estimated $469.9 billion worth of goods and services FOOD & BEVERAGE SALES IN CANADA Record high sales of food & beverage in 2012 with $104.3 billion EMPLOYMENT Retail sector is Canada’s largest employer. 12.5% of Canadian jobs RETAIL SPACE IN CANADA 513 million SF of Shopping Centres (average size – 186,000 SF) 169 million SF of Power Centres (average size – 323,000 SF) 236 power node (Power Centres plus nearby Shopping Centres). Almost 40% located in Ontario RETAILERS IN CANADA Top 100 Retailers in Canada control over 70% of the market share 50% of Canada’s leading retailers are foreign owned and operated (largely US) Top 5 Foreign Owned Retailers in Canada control 19% of total retail sales (1,423 stores) » Wal-Mart, Costco, Safeway, Hudson ‘s Bay & Home Depot CUSHMAN & WAKEFIELD 1
Canadian Retail Real Estate Consumer Confidence, Retail Sales
Source: J.C. Williams/ICSC CANADA VS. UNITED STATES – CONSUMERS CONFIDENCE CDN CCI Index (2002=100) 100 120 20 40 60 80 0 Jan-05 Apr-05 Jul-05 Oct. 05 Jan. 06 Apr. 06 Jul. 06 Oct. 06 Jan. 07 Apr. 07 Jul. 07 U.S. Oct. 07 Jan. 08 Apr. 08 Canada Jul. 08 Oct. 08 Jan. 09 Apr. 09 Jul. 09 Oct. 09 Jan. 10 Apr. 10 Jul. 10 Oct. 10 Jan. 11 Apr. 11 Jul. 11 Oct. 11 Jan. 12 Apr-12 Jul-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 CUSHMAN & WAKEFIELD Jul-13 Aug-13 SERVICES 0 20 40 60 80 100 120 RETAIL US CCI Index (1985 =100) 3
RETAIL SERVICES CANADIAN RETAIL SALES Seasonally Adjusted $45 Retail Sales are Going Up … but Retailer ‘s Margins are Going Down $40 (billions) $35 $30 $25 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Source: Statistics Canada CUSHMAN & WAKEFIELD 4
RETAIL SERVICES Retail Spending vs. Canadian Housing Prices Growth Rate, year over year % 20 Teranet/National Bank Home Price Index Retail Spending 15 10 5 0 -5 -10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: The Globe & Mail/Bloomberg CUSHMAN & WAKEFIELD 5
RETAIL SERVICES CANADIAN RETAIL SALES GEOGRAPHY - 2012 92.3% of Sales are in Western & Central Canada Yukon = 0.1% Northern Canada Eastern Canada Northwest Territories = 0.2% 0.4% 7.4% Nunavut = 0.1% Nfld & Labrador = 1.8% PEI = 0.4% Nova Scotia = 2.8% New Brunswick = 2.4% Quebec 22.1% Western Canada 35.1% Manitoba = 3.6% Saskatchewan = 3.7% Alberta = 14.7% British Columbia = 13.1% Ontario 35.1% Toronto CMA = 16.0% Source: Statistic Canada CUSHMAN & WAKEFIELD 6
RETAIL SERVICES RETAIL SALES PRODUCTIVITY – CANADIAN MALLS Approximately $601 PSF $650 $600 $550 $500 $450 $400 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: ICSC Research CUSHMAN & WAKEFIELD 7
RETAIL SERVICES CANADIAN MALL PERFORMANCE – RETAIL SALES By Province - 3Q 2013 CUSHMAN & WAKEFIELD 8 Source: ICSC Research
RETAIL SERVICES RETAIL SALES PRODUCTIVITY – US SHOPPING MALLS Approximately $466 PSF $480 $460 $440 $420 $400 $380 $360 $340 $320 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: ICSC Research CUSHMAN & WAKEFIELD 9
RETAIL SERVICES RECENT ARRIVALS OR EXPRESSING INTEREST IN CANADA American Retailers European Retailers Source: Cushman & Wakefield 2013 CUSHMAN & WAKEFIELD 10
RETAIL SERVICES FOREIGN ARRIVALS IN CANADA – 1990 TO 2011 Source: Ryerson University CSCA CUSHMAN & WAKEFIELD 11
RETAIL SERVICES RECENT DEVELOPERS INTO CANADA – OUTLET MALLS CUSHMAN & WAKEFIELD 12
Canadian Retail Real Estate Technology Effecting the Retail Business
RETAIL SERVICES TECHNOLOGY EFFECTING OUR INDUSTRY Omni-Channel Strategies Evolving multi-channel dynamics increase the importance of a BRICK & MORTAR MOBILE cohesive omni-channel QR CODE-DRIVEN VIRTUAL strategy SUPERMARKETS (South Korea Subway Stations) BRICK & INTERNET MORTAR AMAZON.COM STORE BRICK & SOCIAL MEDIA MORTAR POP-UP STORE CUSHMAN & WAKEFIELD 14
RETAIL SERVICES TECHNOLOGY EFFECTING OUR INDUSTRY CUSHMAN & WAKEFIELD 15
RETAIL SERVICES TECHNOLOGY EFFECTING OUR INDUSTRY CUSHMAN & WAKEFIELD 16
Retail Real Estate Rental Rates, Vacancy Rates
RETAIL SERVICES CANADIAN HIGH STREET - RENTAL RATES 2012 vs. 2013 (Street Level) 2012 Average Net 2013 Average Net Rent City Submarket Rent ($/sq.ft.) ($/sq.ft.) Vancouver Robson Street $220 $215 17 th Avenue SW Calgary $45 $50 Edmonton Whyte Avenue $45 $45 Saint-Catherine West (street Montreal $180 $190 level) Ottawa Sussex Drive $50 $50 Toronto Bloor Street $320 $320 Toronto Queen Street $100 $110 Source: Cushman & Wakefield 2013 CUSHMAN & WAKEFIELD 18
RETAIL SERVICES STORE VACANCY RATES BY SHOPPING CENTRE TYPE 2007 2012 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Power Centre Super Regional Regional Community Neighbourhood Strip Vacancy Rate 2007 Vacancy Rate 2009 Vacancy Rate 2012 Source: CSCA, 2013 CUSHMAN & WAKEFIELD 19
RETAIL SERVICES This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Cushman & Wakefield Ltd. 2013 CUSHMAN & WAKEFIELD 20
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