Retail news in Canada is a hot topic. The headlines are split between retailers struggling to keep doors open, while others are improving their business models to be more competitive.
For those who are watching all of this unfold, the news will lead you to believe that now might not be a good time to invest in the market. Well, depending on your strategy and offering this may not be so true. Yes there are some businesses that have to rethink how they will do business, but that is normal in any healthy real estate cycle. As markets improve and demands change, so does the way we do business.
There are some retail commercial real estate investors that look at the facts and the numbers to make a decision. There are major opportunities available in Canada right now, particularly in Ontario and Alberta provinces, and many are ready to take advantage of the strong demand from the local consumers.
The high-income bracket in Canada is growing. There are more and more affluent Canadians already there and Asian tourist visiting the country. As such, there is a group of foreign retailers that are aware of these facts and are searching for retail space in Ontario and Alberta provinces. They have aggressive expansion plans to expand into other provinces as well.
Who are they? Many of the new foreign retailers are coming from Asia, in addition to other counties. Despite the struggles of local retailers in Canada, like Sears Canada, Toronto is gaining attention as a global gateway city.
Canada retail in general appears to be in a better situation than the U.S. retailers. One example of this is to take a look at Toys ‘R’ Us. They closed all their stores in the U.S.; however was able to survive in Canada. Canada high-income earners are not only growing in numbers, but the middle class has more spending power. Besides, consumers in the U.S. really enjoy the convenience of shopping online, but Canadians have been a bit slower at transitioning to online retail shopping.
The wealth effect as some call it, has been created due to rising housing prices. This has created a growing high-income bracket, in which the luxury brands have noticed. CBRE, a commercial real estate agency released a report in May 2019 showing a record high of 40 new international chains opening up stores in Canada in 2017. Ontario province received 11 of these new retail entrants. This put Toronto (Ontario province) as the 7th most popular location in the world for international retail expansions.
Amongst the entrants have been MINISO, a discount retailer of various home goods, cosmetics, apparel, and electronics. They offer high quality products at low prices, aiming to improve people’s happiness. Founded in just 2013, they entered Vancouver in 2017 and now have more than a dozen stores in the British Colombia province, eleven in the Ontario province and a handful more in Alberta province. They are planning to open 100 more Canadian stores in 2019, 500 more in three years and want to grow to 6,000 locations worldwide. Their growth projection is very ambitious, but it shows the type of optimism foreign retail business has for Canada. For those who own retail real estate or who wants to own it now is the time. Demand does not appear to be slowing down anytime soon.
There is a lot to pay attention to in retail right now. While some are closing their doors, or reinventing their brands, others have a set plan that they are working. Retail news in Canada is filled with booming success stories, as Miniso hopes to be, and surprise closers, like Sears Canada. Either way the storyline is written, there continues to be strong demand for retail space in Ontario and Alberta provinces.
Contact ReDev today to gain more insight about Canada retail real estate opportunities.