By Mario Toneguzzi
Despite a challenging economy in the past three years, Cadillac Fairview remains bullish on the Calgary retail market and its long-term prospects.
So bullish in fact that it has invested close to $180 million in recent years in renovations and upgrades to the real estate company’s jewel shopping centres in Calgary - CF Chinook Centre and CF Market Mall.
“Notwithstanding some economic challenges in Calgary over the last couple of years as well as challenges in the retail sector as a result of technology disruption, we’re still a big believer in retail in Calgary,” said Wayne Barwise, executive vice-president of development for Cadillac Fairview.
“The real proof in the pudding is if you look at the last three years - 2016, 2017 and 2018 - we’ve invested about $177 million into both of those centres. That’s significant . . . All told we’re really big believers in the Calgary market long-term.”
From a retail centre perspective, Cadillac Fairview owns just the two shopping centres in Calgary and CF Market Mall is owned on a 50/50 basis with Ivanhoe Cambridge but Cadillac Fairview is responsible for managing it.
Barwise said the company has invested $101 million at CF Chinook Centre.
That includes a $14.5-million pedestrian bridge that connects CF Chinook Centre with an LRT station a few blocks away and crosses over the busy Macleod Trail roadway. Barwise said Cadillac Fairview put in $8 million for the project while public funding covered the rest of the cost.
A $17-million renovation to the food court area has just been completed. The south part of the mall has also been upgraded with new flooring and railings at a cost of $4.5 million.
Also, Cadillac Fairview put $65 million into redeveloping the space left behind by Target to accommodate this year the opening of a new Saks Fifth Avenue store.
Just recently Chinook also saw the opening of a new Louis Vuitton store.
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During the same period, Cadillac Fairview has invested about $76 million in CF Market Mall. That includes a redevelopment of the former Target space for $40 million to accommodate a new Sporting Life store, an expanded Zara store and a new HomeSense store.
The company invested $18 million for the expansion of the SportChek store. An outparcel site, formerly housing Staples, was redeveloped for Saks OFF 5TH and a Landmark Theatre coming at a cost of $17.3 million.
“We’re quite excited about the Landmark Theatre that’s going to open a premium movie theatre through the Spring of 2019,” said Barwise.
The company is making the huge investment at a time when there is some “technology disruption” that’s taking place in the retail sector.
“Our view is that the good retailers and the good retail properties will continue to thrive, although depending on which retail category you pick you might see online sales in the eight per cent or so range. Some of them are a bit higher. Some of them are a bit lower . . . What that means is 90 per cent of product is still bought in a physical store and the retailers who are really successful are those retailers who have a combined platform. What we call an omni-channel platform. They have a bricks and mortar presence. They have an online presence. They have a mobile presence - your phone, your app. And we find that by the time people do an in-store purchase over 80 per cent of them have already researched or checked the product out either on their phone or online. So the retailers who do really well combine all of that together in an omni-channel platform,” said Barwise.
“People when they come to the mall what they really look for is the experience. They want to touch and feel things. They want to interact with people. They often want to get some entertainment and have some lunch. So experience at our retail centres is something we’re going to be continuing to invest in. We’re also in the retail side investing in technology as well.”
The opening of some of the new stores in CF Chinook Centre and CF Market Mall is a significant trend, said Barwise, because they are aspirational or luxury which really speaks to the confidence of retailing but also to the confidence of Calgary.
And Cadillac Fairview isn’t done yet with investing in Chinook Centre.
Barwise said Cadillac Fairview has city approval for more than one million square feet of extra density on the site.
“When the market conditions are right we will be expanding that to include some more retail, some residential, some office, some hotel and entertainment. We see Chinook Centre becoming a real mixed-use, live/work/play environment,” said Barwise.
“With the LRT being just down the block, we think the long-term growth potential and evolution of Chinook Centre is terrific. We’re working on plans right now. And at such time that the market is right for any of those asset classes . . . we’ll be bringing them forward.”
CF Market Mall is basically capped out on the density for the property but there is an application in place currently for a minor addition to the existing property.
“We will just continue to re-merchandise the property as we do with all our properties possibly looking for new-to-market retailers. We’re looking for retailers who are currently in the property and doing well and look to expand. It’s a constant evolution for us and we’ll continue that at both these properties as we do with the balance of our portfolio,” said Barwise.
Cadillac Fairview is one of the largest owners, operators and developers of best-in-class office, retail and mixed-use properties in North America. The Cadillac Fairview portfolio is owned by the Ontario Teachers' Pension Plan, a diversified global investor which administers the pensions of more than 300,000 active and retired school teachers. The real estate portfolio also includes investments in retail, mixed-use and industrial real estate in Brazil, Colombia and Mexico.
The portfolio is valued at more than $29 billion and includes over 37 million square feet of leasable space at 67 properties in Canada, including landmark developments, such as Toronto-Dominion Centre, CF Toronto Eaton Centre, CF Pacific Centre, Deloitte Tower and CF Carrefour Laval.
Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, city and breaking news, and business. For 12 years as a business writer, his main beats were commercial and residential real estate, retail, small business and general economic news. He nows works on his own as a freelance writer and consultant in communications and media relations/training. Email: email@example.com