Canada’s Improving Sales, Big Projects and Brand Expansions

Canadians are beginning to see inflation ebb after exceeding the Bank of Canada’s 2% annualized target for several quarters. As a result, consumer confidence in September increased to its highest level since August 2023, according to The Conference Board of Canada. Those good vibes followed a higher-than-expected jump in retail sales from June to July — nearly 1% versus a predicted 0.6% — and projections that sales would rise an additional 0.5% in August, according to Reuters.

That’s good news for the retail property sector, particularly in Toronto, which has seen development shift away from new projects, Marcus & Millichap noted in its most recent Toronto retail report. Redeveloping older and obsolete retail properties into mixed-use assets that offer badly needed housing, for example, tends to provide better returns, the brokerage said. Limited construction and 3.4% population growth in 2023 helped push the average retail vacancy rate in the Toronto metro down to less than 1.5% in the second quarter, a year-over-year decline of 40 basis points. Meanwhile, the average rental rate in Toronto over that same 12-month period rose 2.9%. That marked a return to normalized annual rent growth after increases of around 5% in 2022, the brokerage said.

Montreal lagged behind other Canadian cities in terms of retail rent growth in 2023, but vacancy continued to decline as tourism began to rebound, according to JLL. New development opportunities are opening as a result of downtown Montreal densification around existing and new transit hubs, noted Altus Group, which reported that retail property investment sales there totaled CA$561 million in the second quarter, a year-over-year increase of 12%.

In advance of ICSC@CANADA, check out highlights from the country’s Marketplaces Industry below.

Ambitious Developments

The Well

On the development front, The Well, a massive mixed-use project in downtown Toronto, marked its official completion in the spring when the 70,000-square-foot Wellington Market food hall opened. Developers RioCan and Allied partnered in 2016 to build the project on 7.7 acres. Since the early 1800s, according to The Well’s website, it had been the site of a military reserve surrounding Fort York, an estate house and then the Telegram Publishing Company. The development features 1.2 million square feet of office, 320,000 square feet of retail and restaurant space, and 1,700 residential units, all roughly five blocks north of Lake Ontario. Retailers include Adidas, Structure, Le Creuset, Gotstyle and Black Rooster Decor.

More from C+CT on The Well: 6 Years and 8 Acres: 1 Massive Block Transformed in Downtown Toronto

Cloverdale

A half-hour drive west, QuadReal Property Group and Mattamy Homes will build a massive mixed-use project on the site of the still-functioning but past-its-prime Cloverdale mall in suburban Toronto. The CA$6 billion, 32-acre development will feature more than 5,800 residential units in numerous towers and some 180,000 square feet of revitalized retail, as well as parks and other amenities. Developers are finalizing plans for the first phase, to be known as The Clove, which will include more than 600 condos in adjoining 33- and nine-story buildings. Pre-sales are expected to begin in the fall, according to Urban Toronto.

YZD

Northcrest, a wholly owned subsidiary of PSP, recently announced that the name of its proposed mixed-use development in the heart of Toronto would reference the previous occupant of the land, Downsview Airport. Northcrest will call the development YZD, which was the airport’s three-letter code. The developer plans to transform the area into seven neighborhoods for 55,000 residents over the next 30 years. The first neighborhood, the Hangar District, will include 2,850 homes, as well as retail and office.

Royalmount

The biggest retail news in Montreal this year was Sept. 5’s long-anticipated opening of the Royalmount luxury lifestyle center. The 824,000-square-foot project, developed by Carbonleo and slated to be the centerpiece of a larger mixed-used development, will feature 170 stores, including 60 restaurants and cafes. According to Carbonleo, luxury brands like Louis Vuitton, Gucci, Versace, Saint Laurent and Jimmy Choo have selected Royalmount for their first standalone boutiques in Quebec. The project also features an urban park and a public art trail showcasing both permanent and temporary murals, sculptures, photos and illustrations.

More Retailer Updates

One unexpected driver of retail space demand in Toronto and throughout Ontario could emerge via expanded alcohol sales, Marcus & Millichap suggested. In September, convenience stores began selling beer, wine, cider and ready-to-drink cocktails as Ontario significantly loosened laws surrounding sales of liquor, according to the Toronto Sun. Previously, such sales had been limited to the government-run LCBO stores, the highly regulated Beer Store and select grocery stores. Marcus & Millichap predicted that as many as 8,500 convenience stores across Ontario will begin selling alcohol.

Jimmy the Greek — a third-generation, family-owned quick-service restaurant based in Toronto — will open its first dine-in location, in Simon’s Toronto Premium Outlets. For the past 35 years, the operation had focused on food courts in major shopping centers and on office towers. All told, Jimmy the Greek operates more than 55 locations across Canada.

No Frills supermarket has set its sights on downtown Toronto’s Moss Park neighborhood, according to blogTO. The discount grocer is part of Loblaw Cos., which also operates the Loblaws chain and 15 others. This year, Loblaw announced it would inject CA$2 billion into the Canadian economy, in large part by opening 40 discount supermarkets across the country, expanding or relocating 10 stores and renovating more than 700 existing locations.

Landlord Pop-Up Programs Versus Municipal Pop-Up Programs

Allison Yee founded UpNext in 2018 to build a pop-up ecosystem that educated and supported risk-taking entrepreneurs and helped landlords and communities revitalize storefront retail. Post-pandemic grants and public money for recovery programs later provided an additional avenue to those goals, and so UpNext launched Project: Pop-Up to work with municipalities on main street pop-up programs. Her work is among the municipal pop-up programs Commerce + Communities Today featured earlier this week in 4 Main Street Pop-Up Programs and How They Work. C+CT contributing editor Joe Gose asked Yee more about the public and private worlds and working in the pop-up market in general. Check out their three quick questions below.

What is the biggest difference between working on pop-ups with business property owners and working on them with municipalities?

While the funding fundamentals are pretty unique from one another, the passion is also significantly different. Elected officials and economic development teams very much want their local communities to thrive, and they’re intent on building excitement in a way that you may not see in a mall or lifestyle center.

What are the biggest challenges in the public-sector pop-up world?

The No. 1 challenge is finding adequate funding sources: grants, American Rescue Plan dollars or earmarks that are unique to a particular community. Beyond that, it comes down to finding suitable space in terms of rent, accessibility and condition and [to] forming a collaborative relationship with landlords so that they’ll be eager to provide opportunities to pop-ups that could lead to something longer term.

What advice would you give landlords considering pop-ups?

New Leadership at Art Display Co.

Douglas Kilsheimer, president of sign company Art Display Co., will transition to chair. His daughter, Casey Kilsheimer, will become president, and his son, Brandon Kilsheimer, will become vice president.