Despite ongoing reports that the softening Canadian economy and strong growth of e-commerce are negatively impacting Canadian brick and mortar retailing, the country's top malls continue to experience increasing productivity. This article precedes our annual study of Canada's top 20 most productive shopping centres, to be released early next year.
Canada's top mall landlords are investing heavily in their properties and in some instances, are spending hundreds of millions of dollars to attract shoppers. This is evident coast-to-coast as landlords such as Oxford Properties, Cadillac Fairview, Ivanhoé Cambridge and others invest to maximize returns on their already highly productive retail spaces. Malls are also investing heavily in marketing and promotion, which includes marketing campaigns ranging from pop-up shops on streetcars to Fashion Santa at Yorkdale Shopping Centre.
According to Antony Karabus, CEO of HRC Advisory, "the divide between the winners and the others is increasing. 'A' malls continue to attract a well-curated assortment of leading Canadian and international retailers following the substantial increases in investment in these malls as they upgrade the malls and food court. As a result, they are able to sharply increase the rents they charge retailers to be in these malls, often up to $300 per square foot annually. The massive increase in capital investments made by landlords in Yorkdale, CF Toronto Eaton Centre, Square One, CF Sherway Gardens, CF Rideau Centre, CF Chinook Centre, West Edmonton Mall, CF Pacific Centre and others are 'raising the bar'—they are 'encouraging' their retail tenants to remodel and upgrade their store designs upon lease renewal, at the same time they are adding much higher occupancy charges to their tenants,” said Mr. Karabus.
“These landlords are also spending heavily to add new food experiences, upgrade restrooms and common areas, to create a more luxurious experience to attract the kind of customers that will spend heavily at their tenants”, said Mr. Karabus.
Last spring, we conducted a study where we ranked Canada's top 20 malls by annual sales per square foot. We'll be releasing new numbers in early 2016 and already, several landlords tell us that their numbers will be considerably higher than last year.
We spoke with Greg Taylor, General Manager of Oxford Properties-managed Square One Shopping Centre in Mississauga, to gain insight into a shopping centre that is seeing phenomenal sales productivity growth while it continues to expand and renovate. Annual sales at Square One are projected to hit $1,000 per square foot by the end of the year and recently, the mall has seen increases of 10% monthly. Last spring when we released our top 20 malls study, Square One had sales of $910 per square foot, as confirmed by landlord Oxford Properties.
Mr. Taylor described how Square One has recently added several new innovative retailers, including Urban Outfitters, Muji and Canada's first NYX cosmetics store. Last week, Canada's fourth technology-savvy Sport Chek flagship opened in the centre. He revealed that retailers Sephora and Zara are particularly strong at the moment, and more high-performing retailers are expected to be added as the centre continues to add new retail space, and improve existing square footage. Since 2013, Oxford Properties has endeavoured to invest $480 million in what will become a 2.2 million square foot shopping centre, second in size only to West Edmonton Mall.
The mall's food component, called 'Food Central', expanded by 40% in the summer of 2013 and is now seeing sales averaging $2,800 per square foot. Food Central features scullery service to cut down on waste, and the mix of improved seating, better restrooms and enhanced food tenants have all led to its success.
In the spring of 2016, the mall will see a 113,000 square foot La Maison Simons open in its new north expansion, while a 122,000 square foot Holt Renfrew and a 19,000 square foot Harry Rosen will anchor a new southwest expansion 'luxury wing' that will feature upscale retailers such as Kate Spade, Ben Sherman, Marc Cain, Stuart Weitzman, Jamie’s Italian Restaurant, and Wolford, among others.
Stay tuned for our annual list of Canada's top 20 most productive shopping centres, to be released in January of 2016.
*All photos in this article are of Square One in Mississauga, via Oxford Properties.