The Canadian Retail Real Estate Market Overview Presented for: Toronto Real Estate Forum 2013 Presented by: John G. Crombie, National Retail Director Cushman & Wakefield Ltd. john.crombie@ca.cushwake.com (416) 756-5448 December 5, 2013
IN CANADA Basic Facts In 2012, retailers sold an estimated $469.9 billion worth of goods and services FOOD & BEVERAGE SALES IN CANADA Record high sales of food & beverage in 2012 with $104.3 billion EMPLOYMENT Retail sector is Canada s largest employer. 12.5% of Canadian jobs SPACE IN CANADA 513 million SF of Shopping Centres (average size 186,000 SF) 169 million SF of Power Centres (average size 323,000 SF) 236 power node (Power Centres plus nearby Shopping Centres). Almost 40% located in Ontario ERS IN CANADA Top 100 Retailers in Canada control over 70% of the market share 50% of Canada s leading retailers are foreign owned and operated (largely US) Top 5 Foreign Owned Retailers in Canada control 19% of total retail sales (1,423 stores)» Wal-Mart, Costco, Safeway, Hudson s Bay & Home Depot 1
Canadian Retail Real Estate Consumer Confidence, Retail Sales
CANADA VS. UNITED STATES CONSUMERS CONFIDENCE 120 120 CDN CCI Index (2002=100) 100 80 60 40 20 U.S. Canada 100 80 60 40 20 US CCI Index (1985 =100) 0 Jan-05 Apr-05 Jul-05 Oct. 05 Jan. 06 Apr. 06 Jul. 06 Oct. 06 Jan. 07 Apr. 07 Jul. 07 Oct. 07 Jan. 08 Apr. 08 Jul. 08 Oct. 08 Jan. 09 Apr. 09 Jul. 09 Oct. 09 Jan. 10 Apr. 10 Jul. 10 Oct. 10 Jan. 11 Apr. 11 Jul. 11 Oct. 11 Jan. 12 Apr-12 Jul-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 0 Source: J.C. Williams/ICSC 3
CANADIAN SALES Seasonally Adjusted $45 Retail Sales are Going Up but Retailer s Margins are Going Down $40 $35 $30 $25 Jan-07 Jul-07 (billions) Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Source: Statistics Canada 4
Retail Spending vs. Canadian Housing Prices Growth Rate, year over year % 20 Teranet/National Bank Home Price Index Retail Spending 15 10 5 0-5 -10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: The Globe & Mail/Bloomberg 5
CANADIAN SALES GEOGRAPHY - 2012 92.3% of Sales are in Western & Central Canada Yukon = 0.1% Northwest Territories = 0.2% Nunavut = 0.1% Northern Canada 0.4% Eastern Canada 7.4% Nfld & Labrador = 1.8% PEI = 0.4% Nova Scotia = 2.8% New Brunswick = 2.4% Western Canada 35.1% Quebec 22.1% Manitoba = 3.6% Saskatchewan = 3.7% Alberta = 14.7% British Columbia = 13.1% Ontario 35.1% Toronto CMA = 16.0% Source: Statistic Canada 6
SALES PRODUCTIVITY CANADIAN MALLS Approximately $601 PSF $650 $600 $550 $500 $450 $400 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Source: ICSC Research 7
CANADIAN MALL PERFORMANCE SALES By Province - 3Q 2013 Source: ICSC Research 8
SALES PRODUCTIVITY US SHOPPING MALLS Approximately $466 PSF $480 $460 $440 $420 $400 $380 $360 $340 $320 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Source: ICSC Research 9
RECENT ARRIVALS OR EXPRESSING INTEREST IN CANADA American Retailers European Retailers Source: Cushman & Wakefield 2013 10
FOREIGN ARRIVALS IN CANADA 1990 TO 2011 Source: Ryerson University CSCA 11
RECENT DEVELOPERS INTO CANADA OUTLET MALLS 12
Canadian Retail Real Estate Technology Effecting the Retail Business
TECHNOLOGY EFFECTING OUR INDUSTRY Omni-Channel Strategies BRICK & MORTAR MOBILE QR CODE-DRIVEN VIRTUAL SUPERMARKETS (South Korea Subway Stations) Evolving multi-channel dynamics increase the importance of a cohesive omni-channel strategy BRICK & MORTAR INTERNET AMAZON.COM STORE BRICK & MORTAR SOCIAL MEDIA POP-UP STORE 14
TECHNOLOGY EFFECTING OUR INDUSTRY 15
TECHNOLOGY EFFECTING OUR INDUSTRY 16
Retail Real Estate Rental Rates, Vacancy Rates
CANADIAN HIGH STREET - RENTAL RATES 2012 vs. 2013 (Street Level) City Submarket 2012 Average Net Rent ($/sq.ft.) 2013 Average Net Rent ($/sq.ft.) Vancouver Robson Street $220 $215 Calgary 17 th Avenue SW $45 $50 Edmonton Whyte Avenue $45 $45 Montreal Saint-Catherine West (street level) $180 $190 Ottawa Sussex Drive $50 $50 Toronto Bloor Street $320 $320 Toronto Queen Street $100 $110 Source: Cushman & Wakefield 2013 18
STORE VACANCY RATES BY SHOPPING CENTRE TYPE 2007 2012 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Power Centre Super Regional Regional Community Neighbourhood Strip Vacancy Rate 2007 Vacancy Rate 2009 Vacancy Rate 2012 Source: CSCA, 2013 19
This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete. Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Cushman & Wakefield Ltd. 2013 20