Year End Retail Report Metro 2014 tel: 604 684 7117 www.dtzvancouver.com
METRO VANCOUVER OVERVIEW The retail market in Metro continues to look optimistic heading into Q1 2015. The low Canadian dollar and commodity prices were among the top headlines to end the year. The deflated Canadian dollar has had a positive lift on Metro s retailers. Domestic consumer spending is up, as fewer Canadian consumers resort to cross-border shopping, subsequently fewer Canadians participated in the US Black Friday, and Boxing Day sales in 2014 compared to 2013. In return, the Metro retail market has also benefited from an increase in international and US consumer spending. Early reports that holiday spending was up in 2014 and the Bank of Canada s interest rate cut to 0.75% should help stimulate the market in 2015. BC exports continue to rise as expected, with imports feeling the adverse effects of the weak Canadian dollar. BC s unemployment rate fell 0.4% to 5.4% in December of 2014, which is the lowest in the province since 2008. Commercial building permits for Metro shot up 109 % this past quarter to $1.223 billion compared to $585.8 million in the previous quarter. American retailers continue to expand into Canada, and will be key players with over 7,000,000 square feet of retail space coming to market in the next 5 to 6 years. A number of retail shopping centre re-development projects are underway in the Metro market. The most notable being Brentwood Town Centre which will add 550,000 square feet of retail space to the existing mall and 6,000 residential units to the finished project. The first 60,000 square feet of new retail space and two towers will be ready for occupancy in Q2 2018. Target s announced closure of all of their 133 Canadian stores is the big news to start 2015. As Target looks to vacate their real estate in BC, existing tenants such as fitness clubs, Walmart, Canadian Tire, Whole Foods, and IKEA may be looking to expand their BC coverage. IKEA has plans to expand its presence in the B.C. market with smaller footprint locations of approximately 37,000 square feet. Similarly, Whole Foods is also expanding with lease commitments to Centreview in North and Solo in s Brentwood area. Both projects are mixed-use residential/commercial projects. The French retailer La Maison Simons will open its 100,000 square foot store in Park Royal this fall. Don Rogers of DTZ Toronto handles the company s site selection in Canada. DOWNTOWN CORE GASTOWN DOWNTOWN SUBMARKET LEASE RATE TRENDS The Downtown Core is currently experiencing rejuvenation with a new wave of tenants. The Seattle based retail giant Nordstrom is set to officially open on September 18th, 2015 absorbing 230,000 square feet. Competitors in the department store category, regional and local retailers alike, will reap the benefits of the influx of pedestrian traffic generated by Nordstrom. New retailers including Tesla Motors have already taken advantage of the anticipated new traffic by opening up their first showroom on the 900 block of in 2014. Other notable entrants Downtown include French luxury retailer Christian Dior currently building a two-level 7,000 square foot flagship store in the Hotel on the corner of West Georgia and Burrard. The Carlyle at the corner of Thurlow and Alberni has signed DeBeers, Prada, and Moncler. The US based luxury retailer Saks Fifth Avenue, will also enter the Market within the next couple of years. In order to stay competitive with the newcomers and benefit from the increased traffic, Pacific Centre s Holt Renfrew and Harry Rosen, both established upscale retailers, have plans to expand and renovate their current spaces. The growing luxury retail market has forced Chapters Indigo to announce its plans to close its Robson Street store due to rising lease rates. The multi-level 60,000 square foot bookstore space is expected to be backfilled by a large format fashion and sporting goods retailer. Gastown is well known as a destination for tourists attracted to the historic and trendy part of Downtown. The retail landscape is rapidly evolving as relatively low lease rates, compared to other Downtown submarkets have fueled an influx of boutiques, up-scale restaurants, stylish art galleries, and unique fashion retailers. The hip nature of this submarket has also attracted high profile tenants such as luxury retailer Versace Home, which established its first free standing flagship store in Canada. Another trendy new retailer in the neighbourhood is Kit and Ace with a 4,500 square foot flagship shop. Blacktail, Cinara, Tacofino, and The Abby are just a few of the new restaurants that have also recently opened in this busy commercial area. Alberni Street Burrard Street Georgia to Davie Davie Street Denman Street Granville Street Downtown Hornby Street 2015 Trend Net Rent (psf) 2015* $130 $160 $40 $100 $30 $55 $55 $75 $40 $125 $45 $180 Tax & Cam 2015* $15 $30 $15 $40 $15 $20 $20 $30 $15 $30 $20 - $50 Burrard to Bute Burrard to Beatty Bute to Denman Gastown Yaletown West Georgia 2015 Trend Down Net Rent (psf)2015* $150 $250 $60 $120 $50 $120 $20 $65 $40 - $80 $35 - $125 Tax & Cam 2015* $50 $65 $20 $45 $20 $40 $15 $25 $20 - $30 $20 $35 *Estimated Year End Report Retail Metro 2014 dtzvancouver.com
YALETOWN This affluent submarket is home to some of the city s best salons, restaurants, and lounges. Its proximity to high-density, condo towers, and the Canada Line SkyTrain Station at Davie and Mainland streets compliment the area. Retrofit brick and beam former warehouse buildings now facilitate retail spaces and quality offices above. Demand for this heritage submarket remains steady, with recent entrants such as an All Risk Insurance agency and Bella Gelateria committing to the area. Lower Mainland Lease Rate Trends Municipality Lease Rate Trend North Delta Coquitlam SOUTH GRANVILLE South Granville is a sophisticated shopping district where premier brands have assembled outside of the Downtown Core. High-end apparel and furniture retailers such as Pottery Barn, Restoration Hardware, and Anthropology predominately occupy this affluent shopping district. Vacancy rates for the area remain low as retailers continue to flourish in this centrally located submarket. Port Coquitlam Mission Pitt Meadows Surrey Langley Abbotsford Chilliwack BROADWAY AND CAMBIE This neighbourhood has seen explosive growth since the introduction of the Canada Line SkyTrain route in 2010. Major anchors Whole Foods, London Drugs, Canadian Tire, Home Depot, Save On foods, and Best Buy Electronics are major traffic generators. The most notable development near Cambie and Broadway, one of s busiest intersections, is OrcaWest s Broadway Central which was substantially completed in 2014 with 17,000 square feet of fully leased retail space. HASTINGS CORRIDOR Hastings Street is a key east-west street in and one of the more important transit corridors in the City. The Hastings Corridor is beginning to see substantial retail commercial and residential growth which has been evident in the past year with numerous mixed use projects under construction. Notable developments include; Wall Financial s Strathcona Village development at 955 East Hastings, which will add 64,000 square feet of retail space. Millennium s Boheme development at 1500 East Hastings, adding 22,000 square feet of retail space, and Loblaw s No Frills at 1460 East Hastings, which recently opened its 23,382 square foot grocery store this past quarter. The strategically located submarket is beginning to transition from a primarily industrial zoned area, into a densely populated retail commercial node. NORTH SHORE The North Shore boasts some of the highest household and disposable incomes in Metro. Park Royal Mall dominates the retail landscape in West with international retail giants such as Zara, J Crew, Sephora, and Anthropologie taking centre stage in the newly renovated south portion of the mall. Quebec s La Maison Simons is set to open its 100,000 square foot fashion store in Q3 of this year. The other notable development underway is Grosvenor s mixed use project at the south east corner of 13th and Marine Drive. In North, Lonsdale has seen significant development in the past year with numerous mixed-use projects under construction. The Wallace & McDowell project located at 1st and Lonsdale is set for completion in Q1 of 2016 and will add over 12,000 square feet of retail space to Lower Lonsdale. Onni Group s project Centreview located at 13th and Lonsdale is scheduled for completion in Q2 2017, adding 90,000 square feet of retail anchored by Whole Foods, further to the east located close to the Second Narrows Bridge is the new NorthWoods Village which is set for completion in Q3 2015, adding 50,000 square feet of retail space anchored by Stong s Grocery Store and a private liquor store. VANCOUVER SUBMARKET LEASE TRENDS Commercial Drive Venables to 13th Ave South Granville 5th to 16th Ave Kingsway Main Street Broadway to 28th Ave Chinatown 2015 Trend Net Rent (psf) 2015* Tax & Cam 2015* $30 - $45 $10 - $15 $30 - $90 $20 - $35 $10 - $35 $10 - $15 $20 - $50 $10 - $15 $18 - $35 $10 - $15 2015 Trend Net Rent (psf) 2015* Tax & Cam 2015* West 4th Avenue Fir to Alma West Broadway Granville to Main West Broadway Granville to Alma $30 - $70 $15 - $25 $22 - $55 $10 - $20 $22 - $55 $15 - $ 20 Hastings Street $20 - $40 $10 - $15 *Estimated Year End Report Retail Metro 2014 dtzvancouver.com
SUBURBAN MARKET OVERVIEW The suburban markets have seen significant retail and residential growth over the past year, most notably the,, and New Westminster markets. With the exception of lease opportunities in close proximity of Sky Train stations, the overall tone of retail leasing activity in the Suburban markets is steady with retailers evaluating new locations. BURNABY, NEW WESTMINSTER The big news in is Shape Properties redevelopment of Brentwood Mall, which will add 550,000 square feet of retail space, plus 6,000 residential units to the North Area. Appia Developments Solo, a Whole Foods anchored mixed use retail/office and residential development is well under construction. Solo adds 1,351 residential units, 259,805 square feet of office space, and 102,433 square feet of retail space, with phase 1 completion slated for Q3 of this year. Anthem Properties and Beedie Group s redevelopment of Station Square in Metrotown will add 2 new 50 storey residential towers above a retail promenade scheduled for completion in 2020. New Westminster continues to see strong multifamily residential growth and with it increased demand from consumers. town (Sixth Street & Sixth Avenue) continues to be the most desirable for retailers due to the higher income draw. The other notable area is Downtown featuring Columbia Square Plaza, a traditional grocery anchored centre as well as New West Station (Plaza 88) anchored by Safeway and featuring direct access to the Sky Train platform. Queensborough Landing has been reinvigorated, taking advantage of its central location, proximity to major arterials and density from New Westminster, North Delta, and Surrey Centre. Home Outfitters, Lowe s, Walmart, and Banana Republic are just a few of the tenants drawing traffic to Queensborough. RICHMOND is currently undergoing extensive residential development, particularly in the Olympic Oval District along No.3 Road with urban villages clustering around the Canada Line transit nodes. The No. 3 Road corridor is transforming from a long stretch of strip malls into a growing parade of high-rise residential and commercial buildings. Lease rates along the transit route have seen a lift with the increased density and foot traffic in the area. The most notable retail development is s first true upscale outlet mall, taking shape next to the International Airport. Set to open in late Q2 of this year, the mall will feature high-end luxury retailers such as Prada, Arman, Burberry, and Michael Kors. PORT MOODY, COQUITLAM, PORT COQUITLAM Metro s North East sector is poised for growth with the arrival of the Evergreen Line in 2015. Port Moody is expected to benefit with more high-rises in the town centre and the potential build out of single family within the Ioco lands. Two new shopping centres have recently been built along the Lougheed Highway, namely Oxford Crossing and Freemont Village. Port Coquitlam s Dominion Triangle will see significant retail growth in the next couple of years with the Onni Group s Fremont Village project slated to commence its second phase of construction early this year. Tenants to the development include: Canadian Tire, Walmart, Mark s Work Wearhouse, PetSmart, Dollarama, and Shoppers Drug Mart. Freemount and the neighboring Dominion Triangle Shopping Centre will accommodate the growing population in the area, particularly the anticipated residential growth on Burke Mountain. Safeway plans to redevelop its stores in the Austin Heights and Burquitlam neighborhoods but neither will include a significant amount of ancillary retail space. SURREY Surrey continues to be one of the fastest growing cities in Canada, with approximately 800 new residents welcomed to the area each month. Surrey City Centre is currently transitioning into a densely populated commercial node with numerous residential mixed-use projects slated for construction over the next 5 to 10 years. Concord Pacific s Park Avenue West project is currently under construction and will add 250 residential units to the immediate area. The City of Surrey opened their new 210,000 square foot LEED Gold Certified City Hall building early last year in an effort to revamp Surrey s City Centre. PCI s King George Station, a mixed-use development under construction includes 350,000 square feet of retail space. Phase I is slated for completion in Q3 2015. Coast Capital Savings will anchor the project, committing to approximately 9,000 square feet. In South Surrey, a 122,692 square foot Real Canadian Super Store is under way and will include ancillary retail on the southeast corner of 24th avenue and 160th street across from Morgan Crossing. ABBOTSFORD, CHILLIWACK Abbotsford and Chilliwack have experienced steady deal velocity over the past year. Retail net rents have been more attractive to retailers along with tenant inducements as landlords respond to market conditions. With modest demand for new space in the foreseeable future landlords are expected to become more aggressive to secure new tenants and retain current ones. Abbotsford s most notable new development is Shape Properties High Street on the west side of Abbotsford. Recently Steve Nash Fitness World and Sephora announced new deals. The 600,000 square foot open air regional centre which opened in 2014 is anchored by Walmart, London Drugs, H&M, Cineplex, and Milestones. Notable Retail Sale Transactions 2014 Notable DTZ Retail Lease Transactions 2014 Property Address Name Marine Gateway HighStreet Shopping Centre 5640 Hollybridge Way 7860 Alderbrige Way Clover Square Highstreet Shopping Centre 1994 West 4th Ave Pacific Centre Mall Municipality Abbotsford Surrey Abbotsford Size (sq ft) 16,500 15,855 15,324 10,000 10,000 6,422 5,012 3,167 Tenant Focus Furniture Ltd. Ace Hardware Milestones Patagonia Inc. Property Address Name Municipality Price Size (sq ft) Price/ sq ft Purchaser Mienhardt Fine Foods Richport Town Centre & Ackroyd Court $78,400,000 130,000 $603 0998036 B.C. Ltd Ladner Centre Delta $35,250,000 85,974 $410 Ladner Centre Holdings Ltd. 3100 St. Edwards Drive $33,000,000 79,069 $417 South Branch No. 1 The Prescott 1250 Lonsdale North $30,516,815 60,000 $509 Blueshore Financial 3000 Sexsmith Road $29,600,000 79,930 $370 Canadian Fortune Land Investment Limited 2855 Gladwin Road Abbotsford $25,200,000 144,525 $174 Choice Properties REIT 8530-8550 Cambie Street $20,500,000 47,175 $435 PCI Group / Triovest Realty Advisors 1042 Alberni Street $15,000,000 4,180 $3,589 1002226 B.C. Ltd. 819 Automall Drive North $10,047,000 13,915 $722 Dilawri Group of Companies Under Construction & Potential Developments 2014 Developer Project Name Municipality Retail Size (sq ft) Tenants Estimated LANGLEY Ivanhoe Cambridge Tsawwassen Mills Tsawwassen 1,200,000 BASS Pro, Rona, Walmart Q2 2016 DELTA, LADNER, TSAWWASSEN Two of the larger retail projects under construction in Metro are Tsawwassen Mills and Tsawwassen Commons being developed in tandem by Ivanhoe Cambridge, The Property Development Group, and Tsawwassen First Nations. The projects are situated at the intersection of Highway 17 and 52nd street in Tsawwassen, and will add 1,710,000 square feet of retail space ready for possession in Q2 2016. A 145,000 square foot BASS Pro has been announced for Tsawwassen Mills, along with Walmart and Canadian Tire anchoring the Commons Site. Langley is made up of several shopping districts with Willowbrook remaining the largest at 200th Street and the Langley Bypass. Growth areas include Qualico s Willoughby Town Centre located at 80th Avenue and 208th Street. This new mixed-use residential project with a village shopping centre is anchored by a 27,000 square foot Loblaw s Independent Grocer and a 16,000 square foot Shoppers Drug Mart. Phase I of the development will also offer 322 condominium homes to the immediate area. Mosaic Homes has started construction of Clayton Market located at 64th Avenue and Fraser Highway, just west of Willowbrook. The project is composed of a 15,000 square foot retail plaza, scheduled for completion early this year. Shape Properties PDG McArthurGlen Group Appia Developments Onni Group GWL Realty Advisors Brentwood Town Centre Tsawwassen Commons McArthurGlen Designer Outlet Mall Solo Centreview NorthWoods Village Tsawwassen North North 547,192 510,000 376,000 102,433 90,000 50,000 TBD TBD Prada, Armani. Burberry, and Michael Kors Whole Foods, Shoppers, BC Liquor Store Whole Foods Stong s Market, Private Liquor Store Q2 2018 Q2 2016 Q2 2015 Q3 2015 Q2 2017 Q3 2015 All information has been obtained from sources considered to be accurate but is not guaranteed and is subject to conditions at the time of any transaction taking place. Properties are submitted subject to prior sale or lease, withdrawal or changes without notice. DTZ Year End Report Retail Metro 2014 Real Estate Ltd. 2015.
Year End Retail Report Metro 2014 History of DTZ DTZ is a global leader in commercial real estate services providing occupiers, tenants and investors around the world with a full spectrum of property solutions. Our core capabilities include agency leasing, tenant representation, corporate and global occupier services, property management, facilities management, facilities services, capital markets, investment and asset management, valuation, building consultancy, research, consulting, and project and development management. DTZ manages 3.3 billion square feet and $63 billion in transaction volume globally on behalf of institutional, corporate, government and private clients. Our more than 28,000 employees operate across more than 260 offices in more than 50 countries and proudly represent DTZ s culture of excellence, client advocacy, integrity and collaboration. 1784 DTZ founding predecessor firm, Chesshire Gibson, established in Birmingham, UK. Beginnings in London with second predecessor Debenham and Tewson. 1987 Listed on the London stock exchange as Debenham, Tewson & Chinnocks. 1993 A European joint ventures with Jean Thouard of France, and the Zadelhoff Group in Germany and the Netherlands, creates the DTZ brand. 1999 The DTZ brand extends into Asia with partners CY Leung & Co in China and Edmund Tie & Co in Singapore. DTZ s French subsidiary acquired a majority shareholding in DTZ Asset Management, France. 2004-2008 DTZ continued its global growth with the opening of offices in India and Bahrain and its continued expansion into China. These years saw global growth across India, the Middle East, China, the United Kingdom, Canada and the US. 2011 Australia engineering firm UGL Limited acquires the trading operations of DTZ and combines its property services firms: Singapore facilities management firm UGLPremas; US corporate real estate firm UGLEquis; Americas facilities services firm UGL-Unicco; Australia, New Zealand and Middle East facilities management and real estate companies UGL Services, to form a new global property services powerhouse. 2012 UGL s property services companies integrate and rebrand to DTZ; expanding its global presence to 52 countries. Moves global headquarters from London to US. 2014 UGL sells DTZ to a private equity consortium comprising TPG Capital (TPG), PAG Asia Capital (PAG) and Ontario Teachers Pension Plan (OTPP). 2015 The TPG Consortium purchases US commercial real estate firm CassidyTurley, adding 4,000 employees and 900 brokers from 30 major US markets to DTZ. Today, DTZ has 28,000 employees, in over 260 offices in more than 50 countries. DTZ Retail Team Neil McAllister Senior Vice President, Retail direct 604 630 3374 mobile 604 720 3312 neil.mcallister@dtzvancouver.com Sean Ogilvie Vice President, Retail direct 604 630 3402 mobile 604 218 7326 sean.ogilvie@dtzvancouver.com Howard Malchy direct 604 895 2226 mobile 604 727 7117 howard.malchy@dtzvancouver.com Conor Finucane, B. Comm. Office, Investment direct 604 630 3375 mobile 604 209 2928 conor.finucane@dtzvancouver.com Don Mussenden, B. Comm. direct 604 630 3373 mobile 604 724 0700 don.mussenden@dtzvancouver.com Tony Capolongo direct 604 630 3378 mobile 604 290 5318 tony.capolongo@dtzvancouver.com Inquiries Russell Long Sales Coordinator, Retail direct 604 630 3059 mobile 604 354 8845 russell.long@dtzvancouver.com Cheryl MacKenzie Retail Leasing and Commercial Sales direct 604 630 3398 mobile 604 761 0209 cheryl.mackenzie@dtzvancouver.com Laura MacNiel Commercial Sales and Leasing direct 604 630 3397 mobile 604 728 9609 laura.macniel@dtzvancouver.com James Bayley direct 604 630 3385 mobile 604 719 4583 james.bayley@dtzvancouver.com 800-475 West Georgia St. tel 604 684 7117 fax 604 684 1017 dtzvancouver.com @DTZ