The US has been out of recession for some time officially, but national vacancies within large US malls in the second quarter of 2011 reached 11%, the highest in over a decade, with shuttered department stores and anchors turning shoppers off.
Vacancy levels have risen at a time when new shopping centre development has all but stalled, with work focused instead on remodelling existing malls and completing projects already underway. European retailers remain notable in their absence.
What does the future hold for the retail real estate industry in the US? Click here to read the full story in MAPIC Preview 2011, page 67.
But what about north of the US border? What’s happening in Canada?
The Canadian economy is very strong, due to Canada’s stable banking system, low unemployment, good housing and relatively robust comeback after the economic crisis, analysts do not predict a double-dip recession, and it looks like the country will be enjoying a reasonably stable economy for the next few years. As a result, more and more retailers are seeing it as a huge opportunity for growth. Murdoch notes an influx of brands such as Topshop, Burberry, Tory Burch, Tiffany& Co, 7 for all Mankind and Victoria’s Secret setting up shop in cities like Toronto, Vancouver, Montreal and Calgary, which is resulting in extremely low vacancy rates in shopping centres countrywide.
International, and especially European, brands, used to the “high street” retail model, are quick to establish themselves in stores along the streets of Canada. They rent premises from independent landlords eager to fill their properties and keep business moving. In addition, more in keeping with the North American shopping experience, they are taking shop space in the country’s malls and outlet centres. Rather than predicting new builds for 2012, Murdoch sees Canadian centre management companies remodelling existing malls and developing current outlet centres to accommodate this surge in interest.
The other major new development on the horizon, according to Murdoch, is the arrival of the lifestyle centre. Created on a streetscape (rather than enclosed in a single mall building), a lifestyle centre brings together retail and entertainment. It can include hotels, restaurants, sports arenas, cinemas and theatres, as well as the more usual fare of brand-name retailers and department stores. While Murdoch does not think that Canadians will ever completely give up the mall shopping experience, he does see growth in store for these village-feel leisure hubs that can cater for everyone and keep people entertained for whole weekends, rather than just an afternoon.
Whether their tastes run to discount bargains from outlet centres, major brand names bought in classic malls or on the high street, or whole days of shopping followed by a meal and a film or hockey game, it looks like most Canadians are going to be spoilt for choice for years to come.