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Driving Forces — Which Retail Trends Will Gain Traction in Canada?

Posted On September 18, 2014

SmallCalgary2News coverage of retail space in Canada features winners and losers. The retail market in Calgary, Alberta, has been called “the envy of Canada” while Montreal’s is a “sad state of affairs.” Of course there are local factors contributing to the performance of both cities, which, after all, are separated by three provinces and more than 2,000 miles. But looking at retail through the lens of a struggling city as well as a successful one helps uncover trends that cut across the sector as a whole. It also raises an intriguing question about the future of retail in Canada.

The Calgary Herald reported in November that an “unprecedented” 51 retail projects were proposed or under construction in Calgary. The development spans all quadrants of Calgary, with “many in a mixed-use format in the inner city” — a format that’s trending in Canada and the U.S. alike. One project boasting 700,000 square feet of mixed-use development including retail space with condos above is in the heart of East Village, a downtown neighborhood designed to promote high-density living and walkability. The retail space is expected fill up because of the built-in market of 11,500 residents within walking distance.

At the same time, vacancy rates are lowest in Calgary’s suburban retail market, especially in lifestyle centers and big box retail centers as opposed to storefronts.

In Montreal, multifamily buildings are “replacing parking lots in the downtown core at an impressive rate,” according to the Montreal Gazette. That’s good for the high-density format that caters to pedestrians, but a challenge for officials looking to revamp the Sainte-Catherine Street retail corridor. Some say lack of parking is at least to blame for the corridor’s decline, and that parking lots and spaces are “the lungs of downtown commerce.” Existing retailers regularly plead with merchants associations to press for more places to park.

Lack of parking is but one reason retailers seem to prefer Montreal’s suburban areas over its downtown core.

Even as downtown retailers try to increase foot traffic, Canadians are starting to embrace “car culture,” which impacts just about every aspect of society including consumer behavior and retail development patterns. According to the website Business in Canada, “When it Comes to Cars, Canadians are Becoming More American.”

It will be interesting to see if an emerging car culture reshapes retail and other CRE sectors in Canada.

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