Edmonton retail insight

Edmonton retail leasing market slows this year

Despite its positive economic prospects, Edmonton’s retail leasing market is experiencing a decline in volume since a peak in 2021, with current levels below those seen in 2019. This trend is expected to continue, with fewer completions anticipated in the next few years. The lack of major retail projects in the pipeline contributes to the reduction in leasing volume.

On a positive note, retail rents have strengthened due to demand outpacing supply. This suggests that despite the decline in leasing volume, there is still sufficient demand to support rent growth in the retail sector.

Additionally, although there has been an increase in available retail space this year, it is expected that available space will decrease due to the limited new space coming into the market.

Shifting focus to the Edmonton economy, the city has experienced strong population growth since the onset of the pandemic. This can likely be attributed to the relative affordability of Edmonton compared with other Canadian cities, making it an attractive destination for those seeking more affordable housing options.

Additionally, Edmonton leads all Canadian cities in office-to-residential conversions, with over 780,000 square feet of space either completed or proposed. This suggests a shift in the market toward repurposing office buildings for residential use, which could help meet the growing demand for housing and by extension for retail.

Sales for retail and F&B remain strong

Edmonton's restaurant industry has experienced a strong recovery, although there has been a decline in traffic over spring and summer compared with 2022. Overall, the food services sector in Alberta, including both restaurants and quick-service restaurants (QSRs), has performed well, with full-service restaurants holding a slight lead.

Edmonton remains one of the strongest markets in retail sales, with double-digit growth compared to last year. Among the best-performing categories in retail sales are shoes, groceries, and sporting goods. On the other hand, gasoline, home improvement, and alcohol have been the worst-performing categories.

Downtown Edmonton strives to move on by promoting festivals, addressing safety concerns, and advocating for long-term solutions

The retail sector in downtown Edmonton could benefit from the efforts of the Downtown Edmonton Business Association (DEBA) to revitalize the city's core. The promotion of summer festivals such as Taste of Edmonton has attracted a large number of people and created a positive experience for attendees. This potentially helps reduce the stigma associated with issues like homelessness and drug addiction, which have sparked safety concerns and spooked local residents.

The advocacy of local businesses through Business Improvement Areas (BIAs) also plays a crucial role in addressing these issues in the long run. Local businesses understand the importance of a thriving downtown for the overall health of the city and have advocated for funds and programs to tackle the issues faced by the area.

However, there are ongoing challenges in improving downtown Edmonton. The reluctance of civil servants to return to the office and the construction of the Valley Line LRT could make it difficult to navigate downtown and might discourage commuters, diners, and shoppers. Resolving these challenges requires long-term solutions to ensure safety and address addiction issues in the downtown area.

Edmonton’s visitor economy is projected to experience significant growth

Foot traffic at Edmonton International Airport (YEG) has been recovering, with year-to-date passenger traffic increasing by 43 percent over last year. International flights were not permitted during the height of pandemic restrictions, and recovery has been driven primarily by domestic passengers, who are returning at a faster pace than international travellers.

According to the Tourism Master Plan for Edmonton, despite the impacts of the pandemic, the visitor economy is projected to experience significant growth over the next decade. The recovery will take time and international travel is not expected to fully recover until 2025, but domestic and regional travel is anticipated to rebound more quickly.

Visitor spending in the City of Edmonton is not expected to reach pre-pandemic levels until 2026. However, there is forecasted growth of more than 50% above 2019 levels by the end of the decade. This growth in visitor spending will benefit a variety of establishments, including restaurants, entertainment venues, and other businesses that enhance the overall travel experience for visitors.

So, while the recovery in foot traffic and visitor spending will take time, there is optimism for the future growth of Edmonton's visitor economy, benefitting many sectors in the city.

New store openings reinforce the positive trend for shopping centres

Major shopping centres in Edmonton saw store openings, particularly in apparel & accessories, dining, and cosmetics & beauty. Optical Specsavers continues its rapid expansion with stores in Kingsway Mall, Southgate Centre, and West Edmonton Mall. In apparel, Alo Yoga and Balenciaga have been highlights. Outside these categories, discount continues opening locations with Zellers at Hudson’s Bay at Kingsway Mall.

Although some shopping centres are still in the process of recovering, the increase in sales per square foot and in foot traffic are positive signs for the sector.