Edmonton retail insight
Edmonton's retail market sees renewed efforts to revitalize the downtown area
- Heli Brecailo
The forecast for Edmonton's retail leasing market in 2023 remains positive, as tenant occupancy far exceeds departures. Edmonton retail spaces continue to attract both domestic and international brands, such as Specsavers, JD Sports, Balenciaga, Sporting Life, and Zellers. Additionally, a renewed effort to revitalize the downtown core is expected to have a positive impact by summer.
Foot traffic in Edmonton's retail centres is expected to continue its upward trajectory as more individuals return to public transportation, government buildings, shopping malls, and the downtown area. In-person shopping has made a strong comeback following an emphasis on e-commerce, thanks to the relaxation of health mandates and a reduction in consumer hesitancy. Edmonton's quick recovery has made it an attractive destination for both retailers and shoppers.
Although the number of passengers at Edmonton International Airport remains below pre-pandemic levels, it more than doubled last year compared to 2021. Additionally, restaurants experienced a surge in diners, particularly during the week of Christmas and Valentine’s Day. Despite inflation, demand for eating out and flying remains steady.
In 2023, the key drivers of rent growth in Edmonton's retail market are expected to be the demand for retail space, fewer new spaces in the market, and high levels of inflation and interest rates. Although 2022 saw significant growth in retail rents, rent growth is slowing due to deteriorating economic expectations, increasing uncertainty, and retailers being less compelled to expand.
Edmonton is expected to reduce its levels of supply as there are no major completions expected in the next couple of years. Together with Calgary, Edmonton had one of the highest rates of new retail construction in 2022. As demand becomes more uncertain while supply remains low, available rates are expected to remain volatile.
Collaborative efforts underway to boost downtown Edmonton's momentum
Like other major cities in Canada, downtown Edmonton experienced a significant decrease in foot traffic during the pandemic and is currently trailing behind other city areas. Commute activity to workplaces in the downtown core is much lower than in the metro area and outlying regions.
The recovery of downtown Edmonton is expected to be a gradual process, with federal and provincial employees gradually returning to their offices. However, the continuation of remote and hybrid work arrangements remains a limiting factor in the area's resurgence.
To help attract more Edmontonians to the downtown area, new public safety regulations and cultural initiatives such as Downtown Dining Week, Junos, and summer festivals have been promoted. Increased crime, homelessness, and mental health issues have deterred many people from visiting downtown Edmonton.
Numerous stakeholders across public and private sectors are working together to gain momentum, but local retailers face challenges, including Sport Chek's recent departure from Edmonton City Centre Mall. Despite this, Edmonton's Ice District recently saw the launch of Loblaw's City Market location.
Edmonton's successful mall recovery strategy
Edmonton has emerged as a leading market in the mall recovery, thanks to its strategy of revitalizing and repurposing former Sears spaces during the pandemic. This approach led to the opening of Walmart at Kingsway Mall, and London Drugs and Sporting Life at Southgate Centre.
Sales and foot traffic in Edmonton malls have bounced back and are almost at pre-pandemic levels, particularly in terms of sales per square foot.
Similarly to Calgary, Edmonton has prioritized greenfield developments integrated with residential communities, rather than converting malls into mixed-use developments.
Specsavers has been among the leading retail brands to expand operations, opening a few locations early this year. In addition, Balenciaga has recently launched a store at West Edmonton Mall, solidifying Edmonton's reputation as the epicentre of luxury in Alberta once again.
Slow growth ahead in 2023
Despite a recent dip in consumer sentiment, the outlook for retail sales in Edmonton remains optimistic for 2023. The area is expected to build upon the momentum of a successful 2022 and benefit from pent-up demand. However, core retail sales in Edmonton are unlikely to match the 9 percent YoY increase seen in 2022, as the Bank of Canada's measures to curb spending take effect.
In 2022, clothing and accessories, electronics, and general merchandise were among the best-performing categories, while health and personal care, and food & beverage retail saw weaker sales. This trend is likely to continue in 2023.
With warmer weather approaching, restaurants are expected to reopen their patios and get busier. So far, Edmonton diners have not stopped eating out despite higher food prices as Edmonton is one of the leading markets in recovering restaurant traffic. In the spring of 2022, Alberta's food service sales regained much of the ground lost during the lockdown and surpassed pre-pandemic levels in the summer and fall.
To cater to the growing demand for value, Hudson's Bay has announced the opening of 25 new Zellers stores across Canada, including one in Edmonton. These Zellers locations will be situated inside existing Hudson's Bay stores and range from 8,000 to 10,000 square feet, providing shoppers with more value-focused options.