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  #1  
Old Posted Apr 15, 2012, 2:11 PM
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Canada lacks room for new U.S. box stores: Analysts

Canada lacks room for new U.S. box stores: Analysts


April 05, 2012

Atsuko Kitayama



Read More: http://www.torontosun.com/2012/04/05...space-shortage

Quote:
The long-awaited expansion of Target Inc into Canada, announced last year, raises the question, why haven’t more big U.S. chains made the seemingly easy move north into a market where established retailers are doing well. One of the biggest obstacles holding them back is a dearth of suitable commercial space in Canada, analysts say, and the difficulties involved in building more shopping malls and free-standing retail locations. “Finding space is really difficult, but even if they can find it, it’s expensive,” said Maureen Atkinson, senior partner at J.C. Williams Group, a Toronto-based retail consulting firm.

- More to the point for retailers, Canada’s shopping malls are 43 percent more productive than their southern counterparts, in terms of sales generated per square-foot of space, an important industry metric. “U.S. retailers are looking at the Canadian marketplace because of the productivity,” said Daniel Baer, national retail industry leader at Ernst & Young. “Traditionally the retail in Canada has been quite profitable, and that’s why it leads more competitors into the marketplace.” Nordstrom Inc, a high-end department store chain with locations throughout the states, is on record as saying it wants to move north. Kohl’s Corp, the Menomonee Falls, Wisconsin-based mid-range department store chain, also has its eyes trained north, but neither company has announced specific plans.

- Why the higher productivity? Mostly it’s because Canada has fewer shopping malls than the United States on a per-capita basis, with about 15 square feet of space versus about 24 square feet south of the border, according to John Crombie, senior managing director and national retail director for Cushman & Wakefield, a commercial real estate firm. “Canadian malls do substantially better than American malls,” said Sam Winberg, co-founder and principal for Northwest Atlantic (Canada), a real estate consulting firm in Toronto, said. “But it is not because Canadian consumers are better, but because we have a lot less retail per capita than in the U.S.” The development of shopping malls in Canada isn’t as easy as in the United States, experts say. Financing options are more limited, zoning regulations are stricter and the Canadian tax structure can be an obstacle, they said.

- “The Canadian development business is different. It’s slower and more expensive, and more complicated,” Winberg said. Indeed, only two enclosed malls - Vaughan Mills near Toronto, and Cross Iron Mills near Calgary - have been built in Canada since 1989, he said. As a result, demand for space in the existing centers - especially premium locations such as the Yorkdale Mall and Eaton Center in Toronto, and Pacific Center in Vancouver - has skyrocketed, Crombie said. “A lot of locations are running out of space,” he said. “They can’t accommodate newcomers.” Upscale chains such as Victoria’s Secret - the U.S. based-lingerie retailer that made the move to Canada in 2010 - want to set up shop in premium locations. The chain, owned by Limited Brands, has opened 14 outlets in Canada so far, a tiny addition to its stable of more than 1,000 U.S. outlets.

- To be sure, higher sales mean higher rent. Yorkdale, a mall in north Toronto, charges about $200 per square foot in rent, while Long Island’s Roosevelt Field charges about half at $100 per square foot, according to Crombie. Labor, material and distribution costs are higher in Canada, too, while some retailers have to pay for higher duties on imported goods from China and other countries. Even so, profit margins tend to be higher in Canada, Atkinson at J.C. Williams said, because retailers can charge more than the U.S. counerparts. The more concentrated Canadian retail environment enables retailers to set higher prices. In Canada, the four largest retailers have 28 percent market share, versus only 12 percent in the United States, according to BMO Capital Markets research.

- In Target’s case, the second-largest U.S. retailer, took over leases for up to 220 Zellers stores, owned by Canada’s storied Hudson’s Bay Co. That will quickly give the Minneapolis-based chain an immediate coast-to-coast footprint when it opens for business in Canada early next year. “It was a smart play,” Crombie said. “They can get an immediate traction in the market.” Crombie said Target’s expansion could hold some valuable lessons for other U.S. retailers, and many are sure to be watching to see how the discounter fares in the Canadian market. “Everyone wants to see what the degree of the success will be,” he said.

.....
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  #2  
Old Posted Apr 15, 2012, 2:26 PM
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I wonder if we will start to see condo proposals with podium spaces big enough to accommodate a department store? (a la Holt Renfrew in TO)....Might work, although parking might be an issue...
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Old Posted Apr 15, 2012, 3:34 PM
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slow and steady wins the race
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Old Posted Apr 15, 2012, 6:50 PM
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According to local rumours, Target is forcing Thunder Bay's largest mall to expand (even though it already has no where near enough parking or room for parking), and H&M is trying to force HomeSense out of the mall so that it can have a space right beside Target. We only have two vacant large retail spaces, in a dead mall with bad ownership.
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Old Posted Apr 15, 2012, 8:59 PM
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Have we really sunk so low that we accept the Toronto Sun as a credible source for anything? Is Skyscraperpage now in free fall?
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Old Posted Apr 15, 2012, 10:29 PM
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It would seem that there aren't too many new major malls being built in Canada so one has to compete for space, or buy up someone and take their space.
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Old Posted Apr 15, 2012, 10:36 PM
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Quote:
Originally Posted by M II A II R II K View Post
It would seem that there aren't too many new major malls being built in Canada so one has to compete for space, or buy up someone and take their space.
I'm okay with that, the last thing we need is dead shopping malls and box store sprawl in the suburbs that'd kill our cores. Much of this has to do with the fact that Canadian cities are denser and land is therefore pricier. I'm cool with more efficient, productive malls and more surviving farm land. It's not really cheaper when you take into account the extra public infrastructure required to make those stores so cheap. Slow and steady wins the race, like the man said, in the end we'll have the better urban form.
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Old Posted Apr 16, 2012, 1:55 AM
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apparently Calgary is getting a new mall

from the Calgary retail thread:


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Originally Posted by Policy Wonk View Post
A new mall proposal is being prepared for by a US based developer, should drop by the end of the summer. Phase one will be 600,000 square feet with another 300,000 square feet to follow depending on demand.

Proposal is said to be spearheaded by a US retailer after a fruitless eighteen month campaign for a suitable Calgary location which included trying to get Toys R Us or Safeway to give up their Market Mall locations and looking at the bowling alley at Chinook.

Supposedly the development will be on a country club and equestrian theme...
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Old Posted Apr 16, 2012, 2:03 AM
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Country club and equestrian? In Calgary? How novel for them!!
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Old Posted Apr 16, 2012, 2:06 AM
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Originally Posted by vid View Post
Country club and equestrian? In Calgary? How novel for them!!
'Scuse me while I go vomit...

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  #11  
Old Posted Apr 16, 2012, 2:17 AM
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They should make an ocean themed mall or something.
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