big three retail landlords

Big three retail landlords thrive on experience

Oxford, Cadillac Fairview, Ivanhoé Cambridge prevail among top-earning malls
Friday, January 17, 2020

Yorkdale Shopping Centre again takes the title of Canada’s most productive mall in the Retail Council of Canada’s annual analysis of shopping centres with more than 250,000 square feet of gross leasable area. Recently released results reveal Oxford Properties’ super-regional mall in northwest Toronto generated average sales of $1,964 per square foot in the 12 months ending June 30, 2019, equating to a 3.1 per cent increase from the previous year’s sales levels. It also ranks as the ninth busiest mall in Canada, welcoming 18 million visitors last year.

The Retail Council suggests Yorkdale’s strengths are grounded in: a tenant and merchandise mix “offering shoppers a wide range of options, from fast fashion to luxury retailers and many food and beverage choices”; dual highway and transit access, including an on-site connection to a Toronto subway station and 8,000 parking spaces; and ongoing ambitious capital investment and expansion. It’s commended for creating enticing differentiations from competing malls and online shopping.

“The movement towards ‘experiences’ is an opportunity that both retailers and landlords are enthusiastically embracing, especially as value in real estate assets continues to grow exponentially,” the Retail Council report submits. “By carefully curating compelling and productive retailer mixes, upping square footage devoted to food and beverage options, introducing innovative, one-of-a kind, destination-worthy entertainment attractions, and building more residential and office complex options on their properties, shopping centre owners in Canada are setting the groundwork for a renaissance.”

Rounding out the 2019 top-five achievers for sales per square foot are: CF Pacific Centre in Vancouver; CF Toronto Eaton Centre; Park Royal Shopping Centre in West Vancouver; and Southgate Centre in Edmonton. In total, 11 malls surpassed the $1,000 per square foot threshold. Cadillac Fairview manages six of those earners, while Oxford Properties and Ivanhoé Cambridge each manage two and Larco Investments manages one.

“Landlords in Canada have been proactive and have found dynamic strategies to attract new tenants and keep shoppers coming to the mall,” says Diane Brisebois, president and chief executive officer of the Retail Council of Canada.

Cadillac Fairview, Ivanhoé Cambridge and Oxford Properties emerge as the big three retail landlords on a longer list of Canada’s top 30 malls, based on sales per square foot. Cadillac Fairview, with 13 malls, is the most prevalent, followed by Ivanhoé Cambridge with nine, and Oxford Properties with four. Larco, Morguard, QuadReal Property Group and Cushman Wakefield Asset Services each own and/or manage one mall.

B.C. and GTA host large share of high-performance shopping centres

Nevertheless, the earnings spread is fairly dramatic across the Retail Council’s rankings. Yorkdale garnered 154 per cent more per square foot than did its sister shopping centre, Oxford Properties’ Upper Canada Mall, in Newmarket, Ontario, which fills the 30th slot at $773 per square foot. The three top performers all earn more than double per square foot than the malls in the bottom tenth — which also include CF Limeridge in Hamilton, generating $785 per square foot, and Mayfair Victoria, generating $783 per square foot.

Park Royal Centre enjoyed the steepest improvement with a 46.8 per cent jump in sales per square foot — from $914 in 2018 to $1,342 in 2019. “Landlord Larco attributes the gain to increased foot traffic from a newly opened VIP Cineplex Cinema, highly productive retailers such as Tesla and the addition of new retail tenants,” the Retail Council report notes.

That’s even without an Apple store in residence. The retailer, found in 25 of the top-30 revenue-generating malls, is purported to lift revenue by more than $100 per-square-foot wherever it locates.

Park Royal is one of four malls situated in British Columbia’s lower mainland to rank in the top-10 list, while, in total, seven B.C malls are among the 30 most productive. Regionally, the Greater Toronto and Hamilton Area dominates with 12 malls in the top 30. Calgary and the Greater Montreal area each boast two. Winnipeg’s CF Polo Park and Halifax Shopping Centre are the only malls outside Ontario, Quebec, British Columbia or Alberta in the top 30.

Nine of the malls on the list experienced declining sales levels in 2019, but only two — Edmonton’s Southgate Shopping Centre and Halifax Shopping Centre — have recorded two consecutive years of dropping sales. “It’s no secret that the loss of some major retailers was significant for many Canadian malls, with some experiencing a reduction in visitor count and revenue,” Brisebois acknowledges.

Ivanhoé Cambridge’s Conestoga Mall in Waterloo, Ontario, is alone on the top-30 list in falling below the $1,000 threshold after exceeding it in 2018. Sales of $936 per square foot in 2019 are a 7.8 per cent decline from $1,016 in 2018. However, it’s still a 1.8 per cent improvement over 2017 sales of $919 per square foot.

Among 2019 $1,000-plus performers, only Ivanhoé Cambridge’s Southgate Centre has registered a slip from previous levels, as this year’s $1,121 per square foot tally represents a 0.62 per cent dip from 2018 and a 2.27 per cent drop from $1,147 per square foot generated in 2017. Even so, that must be considered in the context of Alberta’s struggling economy. Interestingly, too, the West Edmonton Mall, which received the second highest influx of annual visitors of any Canadian shopping mall — 30 million — did not crack the top-30 for productivity.

In contrast, the performance of CF Chinook Centre and CF Market Mall in Calgary merits attention in the report. Both experienced a pickup in sales tallies, with the Chinook Centre surpassing the $1,110 threshold for the first time — an achievement partly attributed to “adding retailers such as Louis Vuitton and Saks Fifth Avenue.”

Comparable visitor traffic, but demographics differ from U.S.

In addition to placing as Canada’s third most productive mall, with sales of $1,592 per square foot, CF Toronto Eaton Centre was the busiest mall in North America last year, with 52.3 million patrons. That just edged out the Ala Moana Centre in Honolulu, Hawaii, which hosted 52 million, but was well ahead of the 40 million visitors at Mall of America, in Bloomington, Minnesota, which was the second busiest U.S. location.

With the exception of West Edmonton Mall, Canada’s 10 busiest malls are among the top 30 for productivity and seven surpass the $1,000-per-square-foot benchmark. The Retail Council notes that they “have comparable traffic to the top 10 centres in the United States” — generally in the range of 20 to 30 million visitors in both countries.

However, the Canadian malls are much more geographically concentrated with four in the Greater Toronto Area and three in B.C.’s lower mainland, while the busiest U.S. malls are sprinkled through nine different states. Other demographic differences are also apparent.

“While the suburbs are typically home to major shopping centres, four of the top shopping centres are in downtown cores — CF Toronto Eaton Centre, CF Pacific Centre, Montreal Eaton Centre and CF Rideau Centre. This demonstrates the continued strength of Canada’s downtowns when compared to cities in the United States,” the Retail Council report states.

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