The rise of open-air shopping in Canada

Experts predict the surge in open-air outlet development will only increase
Monday, June 23, 2014
By Ilan Mester

There’s no denying the upswing in Canadian open-air shopping developments, particularly in the outlet sector. Projects such as Ivanhoe Cambridge’s recently opened Outlet Collection at Niagara represent a new iteration of the big-box retailing concept, taking it up to mall-sized proportions.

The new Niagara development boasts more than 100 retailers in a 520,000-square-foot configuration, aimed at capturing the region’s steady flow of visitors.

“The advantage of Niagara is we know that the tourist season kicks in starting on the Victoria Day long weekend,” says David Baffa, Ivanhoe’s senior vice president of retail development.

This follows a trend of locating centres closer to where consumers live and visit. Around the same time that Ivanhoe opened its new outlet in southern Ontario, Trinity Development Group cut the ribbon on The Stockyards, a large open-air shopping complex situated in midtown Toronto. At least four projects – including a new outlet on Vancouver International Airport land – are also in development in the Metro Vancouver Area.

“Rather than having people come across the border to do their shopping, we’re locating centres within Canada so that people can shop within their own country and within their own currency – just everything being more towards their comfort zone,” says Lisa Wagner, Avison Young’s outlet centre specialist.

The benefits

Open-air centres are typically more cost-effective and faster to develop than traditional enclosed centres.

“There’s actually kind of an art and science to building these centres so that they are not only very efficient, but affordable to manage in the long run,” Wagner says. “They look good, they shop well – it’s a good experience for the consumer and it’s very cost-effective to manage long-term.”

“You have natural light, so you’re spending less on energy to light common areas. Natural air conditioning – especially in the winter,” Baffa adds.

Lower consumer traffic can be a downside in colder months, but Baffa notes that the same general trend holds for enclosed malls.

Newer outdoor centres typically incorporate covered areas and are designed so that shoppers can quickly reach their destination from their cars. There is also a reasonable expectation that Canadians are accustomed to being outdoors in cold weather.

“You’re used to your own climate, and people dress for their own climate,” Wagner observes.

Upcoming trends 

Wagner says the initial influence of American outlet centres that drew Canadians across the border is what’s prompted a response from domestic retailers to adopt the format within Canada. Next, she foresees more American developers and retailers moving north of the border.

Toronto Premium Outlets, an outdoor centre that opened last year in the Greater Toronto Area’s Halton region, is one such example of Indianapolis-based Simon Property Group moving into Canada in partnership with homegrown Calloway REIT. Outlet locations can be a more cost-effective entry for global retailers to test the Canadian market before committing to pricier leases in regional malls or high-end shopping districts.

“I think you’re going to start seeing more brands certainly from the U.S., but also from the U.K. and Europe as they sort of march across North America,” Wagner says. “It may take a different form than it did five years ago.”

Photo credit: Ivanhoe Cambridge

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