Vancouver retail insight
Canada’s tightest retail market, Vancouver embraces redevelopment opportunities
- Heli Brecailo
Tightest in Canada with notable redevelopment opportunities
The Vancouver retail leasing market experienced a deceleration in the first half of 2023, resulting in one of the lowest volume levels in recent years. However, Vancouver continues to maintain its position as the tightest market among the six major Canadian cities, boasting an availability rate of just under 2 percent. While there has been significant interest in physical space, the completion of new retail spaces has been limited, with a further decrease since 2020.
The construction of new retail spaces has also seen a decline, with fewer construction starts. Despite these challenges, Vancouver stands out in terms of redevelopment, with two major projects – Oakridge Park and Amazing Brentwood (Phase 2) – expected to complete in the next few years.
In the downtown area, the construction of The Post is nearing completion, with the South Tower’s interiors being finalized. The North Tower and the retail concourse are expected to complete later. Amazon will begin moving to the South Tower this fall, and Loblaw CityMarket, a food court, and convenience retail will open at the podium level.
All in all, net absorption remains positive, with stable rents and reduced vacancy in the market.
Vancouver retail sales and food services remain strong
Vancouver's retail sales have demonstrated strength, surpassing inflation this year. Notably, electronics, appliances, footwear, clothing, and accessories have been the top-performing categories. Conversely, sales in home improvement, furniture, and sporting goods have struggled. All home categories have experienced significant declines and remain below pre-pandemic levels.
Meanwhile, B.C.'s food-services sales have thrived, exceeding pre-pandemic levels. While full-service restaurants have outperformed quick-service to some extent, the difference is not substantial.
Additionally, this summer Vancouver experienced higher restaurant traffic than the previous year.
Vancouver leading North America in ridership recovery
Vancouver leads the pack in terms of recovery for transit ridership. Recent research from the Urban Institute reveals that Vancouver's average weekday ridership has surpassed 80 percent of pre-pandemic levels, outperforming its North American counterparts.
TransLink's monthly data for 2023 further highlights a consistent uptick in ridership over 2022, with May recording a remarkable 22 percent year-over-year increase in boardings.
TransLink attributes this resurgence in ridership to a combination of factors, including the strategic decision to retain staff during the pandemic, the steadfast maintenance of service levels, and the flourishing population growth of Metro Vancouver. Furthermore, Vancouver boasts a notably lower office vacancy rate compared with other cities.
YVR has also experienced a notable surge in passenger traffic, witnessing a significant 53 percent increase this year. A large portion of this travel has been domestic within Canada, however, and international travellers (especially those from China) remain noticeably absent.
Malls boosted by new apparel and QSR openings
Mall spaces are undergoing a positive transformation, with vacancy rates continuing to trend down this year. Moreover, malls are demonstrating promising signs of recovering foot traffic, further propelling their renewal.
This boost is attributable partially to the introduction of new apparel, athletic, and quick-service restaurant (QSR) establishments. Noteworthy names such as Alo Yoga, JD Sports, and Garage either announced openings or already began operations in the first half of the year. Additionally, optical retailer Specsavers, electric vehicle manufacturer VinFast, fashion icon Zegna, and value retailer Zellers are also expanding inside malls.
The increasing sales per square foot underscores the growing appeal and productivity of mall spaces, while the steady growth in foot traffic highlights the enduring allure of the mall experience for shoppers. Although some malls are still in the process of fully recovering from the pandemic, the overall upward trend indicates a strong and consistent recovery.
Vancouver's Transit-Oriented Developments to complete 3 million s.f. of retail space
Vancouver's burgeoning urban landscape is taking a significant step forward with the impending completion of several transit-oriented mixed-use projects. Positioned at the forefront of Canada's urban-planning initiatives, the city currently boasts a pipeline of nine ambitious projects. These undertakings collectively encompass over 3 million square feet of upcoming retail space, accompanied by a substantial number of residential units. The intended outcome is to foster transit-oriented communities that seamlessly integrate retail options, essential services, and employment opportunities while emphasizing environmental sustainability.
By repurposing underutilized shopping centres into vibrant transit-oriented development (TODs), Vancouver aims to invigorate urban areas, attracting fresh investments and infusing a renewed sense of dynamism. The adoption of TODs not only highlights the immediate advantages of convenience and accessibility but also aligns with broader urban planning strategies facilitating population growth and encouraging investment. This approach is anticipated to invigorate and diversify the retail landscape, offering an appealing environment for a range of businesses, including flagship stores.
Rooms and Spaces aims to fill the void left by Bed Bath & Beyond
Rooms and Spaces, a new Canadian homeware brand, has debuted in Vancouver, taking over the former Bed Bath & Beyond location. Situated on West Broadway, the store offers dedicated sections for kitchenware, toys, bedding, and bathrooms. Led by Doug Putman, known for rejuvenating brands like Toys"R"Us, Rooms and Spaces aims to be a one-stop-shop for home products. The brand has also opened stores in Kelowna and Victoria, with plans for 15 more locations across Canada, including one in Langley.