Metro Vancouver commercial real estate owners and landlords are rethinking, redesigning and redeveloping the value offered by large regional shopping centres.
The emerging model – which makes Canada a leader in terms of mall redevelopment, according to one analyst – is an environment that integrates residential real estate with work and office spaces and recreation.
This “live, work, play” concept is intended to meet the needs that have emerged following the height of the COVID-19 pandemic, said Adrian Beruschi, senior vice-president of retail at CBRE Vancouver.
Landlords of major malls in the region are sizing up the real estate available to them, such as parking lots, as opportunities to create residential and commercial projects, said Beruschi.
“Typically, the landlords that own these malls are development oriented and have the financial capacity to build fantastic projects. They’re just taking advantage of the opportunity,” he said.
Foot traffic at Metro Vancouver malls remains steady, Beruschi said, with malls in urban cores experiencing softened demand compared to suburban locations, due to lower numbers of employees working out of offices in the endemic pandemic landscape.
Still, local malls recovered faster from the COVID-19 pandemic than those in other parts of Canada, said Craig Patterson, retail analyst and founder of Retail Insider Media Inc. This is in part because B.C.’s pandemic regulations were less disruptive to the economy than those imposed by other provinces, he said.
Landlords are now looking to take advantage of value in their land and high real estate prices. Oakridge Park, at the former site of Oakridge mall, is turning into a “little city,” with Metropolis at Metrotown in the midst of an 80-year development plan that will create a downtown core for the city of Burnaby, Patterson said.
“Canada is a leader in shopping centre redevelopments. There’s no other country in the world doing this to the same scale as what we’re seeing, mainly in Toronto and Vancouver,” he said. “It’s fascinating because it happens in the [U.S] a bit, but not even close to the same prevalence or density that we see in Canada. I can’t think of another country that’s doing this.”
Across Canada, over half of the 30 top-performing regional shopping malls have announced plans or are currently undergoing redevelopment to add residential units to their sites, according to CBRE.
“A lot of them are happening at the same time, which might be creating some challenges for the tenants because they’re in active construction zones quite often,” said Beruschi. “The end result is going to be really positive. You’re gonna have these incredible mixed-use villages where you work, live and shop in very close proximity.”
According to Patterson, foot traffic at Metro Vancouver malls rose after pandemic lockdown restrictions were lifted. He said this indicates that many consumers are looking for experiential retail that goes beyond online shopping.
Glacier Media reached out to malls such as the Amazing Brentwood, the Metropolis at Metrotown, Park Royal and Queensborough Landing in order to obtain information on their respective vacancy rates and sales per square foot, but did not receive a response in time for publication. Willowbrook Mall declined to answer.
Tsawwassen Mills currently has an occupancy rate of 94.8 per cent and is making roughly $430 per square foot across its 1.2 million square feet of retail space, according to Central Walk, the owner of the mall.
In Vancouver, CF Pacific Centre currently makes $1,665 per square foot across 100 stores based at its downtown location, while CF Richmond Centre makes $1,227 per square foot across 191 stores, according to Cadillac Fairview’s website.
Patterson predicts that CF Pacific Centre and downtown Vancouver retail in general will have to compete with Oakridge Park, which already has lease deals with high-end retailers.
“If these high-end retailers open, some of the wealthy shoppers may end up going to Oak Ridge, because Oak Ridge is going to have a roof on it. You don’t have to worry about the temperature, the rain and if there’s any social issues, they can be dealt with very quickly because it’s private property. So, all of that to say that it’s just going to be a very glamorous place to be,” Patterson said.
Both Patterson and Beruschi said that CF Pacific Centre may lose some interest and foot traffic following the closure of Nordstrom in June. When it comes to that space, Beruschi said that La Maison Simons, also known as Simons, would be an “obvious backfill.”
Another option is to extend the mall into the lower level of Nordstrom and fill the space on the upper levels with smaller retailers, said Patterson.
“Pacific Centre has actually an incredible opportunity now. It’s really bad news that Nordstrom is closing because it was a very high-selling store, it was one of the top in the chain,” Patterson said.
Of the malls to watch in the coming year, Patterson said he will be keeping a close eye on Oakridge Park, which described as a “slam dunk for QuadReal and º.” In addition, he believes that CF Pacific Centre will get attention in the coming year as Metro Vancouver residents wait to see who will fill the square footage left by Nordstrom.
CBRE predicts that shopping centres like Guildford Village in Surrey and the Amazing Brentwood in Burnaby will see strong demand in the coming year. In addition, there will be retail deliveries in 2023 coming from The Post in downtown Vancouver, as well as the in-person shopping opportunities presented by the expansion of Willowbrook Mall in Langley.
“I think that the mall owners are well aware that they need to bring unique offerings. It can’t just be a series of fashion and electronic stores,” Beruschi said. “Malls really have to evolve and in my opinion, Vancouver is on the forefront of reimagining what a mall should be.”