The challenges in todays retail leasing market: What is the impact - - PowerPoint PPT Presentation

The challenges in today’s retail leasing market: What is the impact of U.S. Retailers coming into the Calgary Market?

A QUICK UPDATE:

Calgary Vacancy Statistics by Product Type / Quadrant and Market

Shopping Centre Category Vacancy by District

Regional Location

• sq. ft.

% North East 35,951 1.87% North West 33,120 1.16% Downtown 34,827 4.04% Macleod Trail 8,200 0.59% South East 22,464 2.14% South West N/A N/A

Calgary Calgary’ ’s Current Trends s Current Trends Power Centre / Community Shopping Centers Power Centre / Community Shopping Centers

(100,000 sq. ft. Plus) (100,000 sq. ft. Plus) Vacancy Rates (%) Community Shopping Centre Average 0.30% North East 0.42% North West 0.20% Macleod Trail 0.30% South East 0.33% South West 0.21%

Calgary Calgary’ ’s Current Trends s Current Trends Power Centre / Community Shopping Centers Power Centre / Community Shopping Centers

Lease Rates (City Average) $28.00 sq. ft. per annum to $45.00 sq. ft per annum Operating costs (City Average) $6.50 sq. ft. per annum to $12.00 sq. ft. per annum

Street Front Retail in Calgary

Vacancy rates: 0.5% ‐ 3% Rental Rates: $20 ‐ $70 sq .ft. Operating Costs: $8 ‐ $15 sq .ft. Factors Affecting Leasing: numerous owners building size parking municipal bylaws limited supply

Mixed Use & Downtown

• The Calgary Market is new to large scale mixed‐use development

– Keynote – The Bridges – Hanson Square

• Evolution of the Downtown Market as residential base grows
• Impact from American Retailers

– Brooks Brothers – BCBG – Aritzia

• Increase in mixed‐use development as the city expands

Comparison Population 34 million 307 million 1:10 ratio Total Number of Shopping Centers'* 573 8043 1:14 ratio Total Shopping Centre Space 278 million sq. ft. 3.4 billion sq. ft. 1:12 ratio

*Size of shopping centre's ‐ Unfortunately Canada and the US have a different breakdown for centre's above 200,000 sq. ft. Canada (250,000+ GLA): 573 (278,229,266 sq. ft.) US (200,000+ GLA): 8,043 (3,401,341,404 sq. ft.)

Performance Between U.S. and Canada

Less Retail Competition

Canada has 39% less shopping centre space, per capita, than the U.S…. business is not as cutthroat here*

*ICSC website: Total Shopping Center GLA per 100 Inhabitants (US): 2,380 sq. ft. Total Shopping Center GLA per 100 Inhabitants (Canada): 1,457 sq. ft.

U.S. NATIONAL AVERAGE OF RETAIL DEVELOPMENT PSF / PER PERSON: CANADIAN AVERAGE OF RETAIL DEVELOPMENT PSF / PER PERSON:

42* 27*

*The U.S. Retail Space Market ICSC Research Review V.12 No.2. Approximations only. Forecast factoring conducted by Orange. Major Markets.

Canadian vs. U.S. Sales

◘ ◘ Canadian sales are 45% above the U.S. average Canadian sales are 45% above the U.S. average

Comparing Sales (CF vs. Large US Landlord)

RETAILER % DIFFERENCE Abercrombie & Fitch +357% American Eagle Outfitters +53% Bebe +28% Coach +102% Forever 21 +447% H&M +110% Banana Republic +141% Hollister +245% The Gap +151% Sephora +21%

List of U.S. Tenants Entering into Calgary (Enclosed)

Ann‐Taylor Express Free People

• J. Crew

Jack Jones Justice Loft Microsoft Tory Burch Zumiez

List of U.S. Tenants Entering into Calgary List of U.S. Tenants Entering into Calgary (non (non‐ ‐enclosed) enclosed)

Anchor Tenants Other Retailers Target Buffalo Wild Wings Big Lots Inc. Macy’s 5 Guys Burgers & Fries IHOP Kohl’s Smash Burger Menchie’s JC Penny Nathan’s Hot Dogs Dick’s Sporting Goods Jamba Juice Marshalls The Rock Restaurant Cabela’s Costa Vida Whole Foods Market Dollar Tree

Recent Acquisitions:

• 1994 ‐

Wal‐Mart purchased Woolco Canada and Home Depot purchased Aikenheads.

• 2001 ‐

Best Buy purchased Future Shop.

• 2011 ‐

Target purchased 220 Zeller’s locations.

• 2006 ‐

Limited Brands purchased 318 La Senza locations.

• Canadian retailers that may get purchased:

– Dollarama, Jacob, and Le Chateau

• U. S. retailers are notoriously more difficult to negotiate with.
• Strong market fundamentals and limited opportunities create a level playing field

for Canadian Landlords.

Disclaimer

The information contained herein is provided solely for review, discussion & informational purposes and was prepared as a service for the 2011 Calgary Real Estate Leasing Conference. It is not to be used for any other purpose or made available to any other person or company without the prior written consent. While reasonable efforts have been made to ensure the accuracy of the information at the time of its compilation and the information was compiled from sources deemed reliable, the employers nor any of their employees makes any warranty, expressed or implied or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any information, product

• r process contained

herein nor for any actions taken in reliance thereon. Approximations and numerical rounding was utilized throughout this presentation for sake of brevity and efficiency while verbal context was given during the presentation that may alter perception of materials and content contained herein. References are provided for information only and shall not be taken as endorsement of any kind.