Calgary retail insight

Sustained demand and decreasing availability drive Calgary's retail-leasing market

February 28, 2024
  • Heli Brecailo
Market news
  • Calgary's retail-leasing market remains strong, with steady leasing volume and decreasing availability due to high demand and limited supply.

  • Rent growth is starting to show signs of deceleration but is expected to continue to rise, driven by inflation and rising property taxes.

  • Calgary continues to outperform the province, driven by robust consumer spending. Population growth and a positive outlook for the oil industry support long-term prospects.
Strong leasing momentum continues in Calgary

Calgary's retail-leasing market remains robust, although rent growth is showing signs of slowing from its peak in mid-2023. However, leasing volumes remain strong, in part due to strong population growth and continued demand for space.

Despite a decline in net absorption, demand for retail space continues to outstrip supply, resulting in a downward trend in availability. Notably, Alo Yoga, Uniqlo, and Earls have announced mall-based store expansions in the past six months.

Currently, construction activity is relatively subdued, but we anticipate new space from suburban projects The Alpine and Township (Phase 2). In addition, in 2025 Primaris REIT is set to complete the redevelopment of the former Northland Village Mall into an open-air shopping center with residential towers.

The majority of leasing activity in Calgary has concentrated in general retail, neighborhood centres, and malls. CrossIron Mills, CF Market Mall, and CF Chinook have seen significant leasing activity over the past year, with Decathlon, Athleta, Cole Haan, and Knix among the many new retailers opening.

Overall, the retail-leasing market in Calgary is expected to experience strong growth in 2024, as availability decreases and rent growth begins to slow.

Sales activity in Calgary's retail sector reaches new levels

This year’s outlook for retailers is positive, with Calgary’s retail-sales growth exceeding that of the province. Calgarians continue to spend on several types of products and services, with a greater interest in convenience, health care, personal care, and shoes. However, home improvement and furniture expenditure have decreased.

While the local economy is slowing, it is nonetheless expected to outpace national growth rates. Consumer spending growth will slow this year but not contract. A wave of new residents combined with positive oil-demand prospects over the coming years underpin future developments in this area.

In 2023, full-service and limited-service restaurants performed better than retail goods across the province. Limited-service restaurants have also had a stable growth pattern and will grow further accordingly.

Calgary takes the lead in revitalizing downtown

Calgary’s effort to breathe new life into its downtown is visible through a continual transformation of empty office spaces into residences and a significant decrease in office vacancies.

More recently, the Calgary Municipal Land Corporation (CMLC) announced major projects worth over $1 billion at the East End, including mixed-use residential projects, a new theatre at Arts Commons, the grand opening of the BMO Centre expansion, and the Victoria Park/Stampede Station rebuild.

On another positive note, Calgary’s transit ridership has rebounded to become one of the top-ten busiest public transit systems in North America. In Q3-23, Calgary Transit recovered 79% of its passenger trips of 2019, surpassing Los Angeles, Seattle, and San Francisco.

The tourism sector in Calgary is set for a strong year, with Tourism Calgary projecting visitor numbers above the 8.4 million experienced in 2023. A majority are Canadians who come for the city’s famous events like the Stampede, among other factors such as the increasing population of Canada.

Softening outlook but positive prospects ahead

Despite a projected decline in Calgary's retail market this year, the city's ever-growing population and a favourable outlook for the oil industry should continue to drive consumer spending.

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