Strengthening international travel combined with domestic tourism and the return of downtown office workers is making for an active retail real estate market in B.C.
“It seems to be back to normal,” said retail specialist Adrian Beruschi, senior vice-president with CBRE Ltd. in Vancouver. “There are clearly pockets out there, throughout the city and throughout Metro Â鶹´«Ã½Ó³»and the rest of BC that are struggling … but it seems like every listing we have right now, there’s activity on it.”
This is the opposite situation to a year ago, when high-end retail in the downtown core was challenged by a lack of international tourists and in-person work arrangements had yet to establish a post-pandemic normal.
With those questions answered, notwithstanding layoffs in the tech sector, confidence is back among national tenants as well as the lenders backing tenant improvements.
“The entrepreneurial spirit is back,” he said. “The calls for vacant space are as high as I ever recall them being.”
Demand, similar to last year, remains driven by personal services, in-person activities and fashion, as spending pent-up by pandemic restrictions plays out.
Robson Street, the second-most expensive retail precinct in Â鶹´«Ã½Ó³»after Alberni Street, is seeing upward momentum in lease rates that range between $120 and $185 a square foot, according to CBRE’s mid-year retail rent survey. Strong demand for space on West 4th Avenue, which has become even more of a key arterial during construction of the Broadway subway project, has pushed lease rates north to between $60 and $100 a square foot.
Beruschi recently closed a deal with Altea Active, a Toronto-based fitness studio, which secured three floors at 425 West 6th Avenue in the Mount Pleasant neighbourhood totalling 45,313 square feet.
He pointed to QuadReal Property Group’s lease of the former Sears premises at Capilano Mall in North Â鶹´«Ã½Ó³»to the recently opened North Shore Bike Park as another example of the dynamism in the local market as people come together again.
“The gross rent is not easy to handle for a lot of tenants, but the market has been resilient and now I feel like there’s a positive momentum moving forward and I think we’re going to see some cool stuff happening,” he said.
But not all regions are so lucky, and this winter will indicate where the new baseline for many retail precinct lies following the pandemic.
“The change in the office market has had an impact on our downtown retail, and I don’t think that’s just restricted to Victoria. We also see that in Â鶹´«Ã½Ó³»and other major markets,” said Jeff Lougheed, a vice-president with CBRE handling retail space in Victoria. “We’ll have to live through another fall and winter to really understand what’s going on.”
While the return of cruise ships has brought a fresh wave of international visitors to Victoria, revitalizing the historic downtown, merchants along Government and Johnson streets remain affected by hybrid work arrangements.
“Those businesses are seeing less foot traffic and it’s a little bit of a challenge for them to keep their doors open. We have seen some restaurants shutter in Victoria,” he said
Quick-service restaurants remain a primary driver in downtown as franchise groups look to expand, but traditional brick-and-mortar retailers are not taking up space. The lack of demand has put downward pressure on lease rates in the core.
Lougheed pins his hopes on developments such as Harris Green, a massive 1,500-unit residential project Starlight Group has proposed for the 900 and 1000 blocks of Yates and View streets that will see people living in the core. With hybrid work arrangements set to continue, this will make the core less dependent on tourists and commuters.
“It will have a substantial impact on the vibrancy of our downtown core, and I think that’ll also really help retailers,” he said.
