Canadian home sales fell for the first time in nine months. However, despite this drop in price, combined with the prospect of higher interest rates and assertions that Canada's housing boom is too dependent upon large markets, the strong Canadian housing market is driving a prospering retail property investment sector. Sears Canada Downsizing For years, Sears Canada's struggle for profitability was underpinned by the failure to capitalize on their flagship location in Toronto's Eaton Centre, which was opened in 2000 after buying assets from then-failing department store chain Eaton's. Since June & October 2013, they have raised almost $600 million by closing the following six locations and arranging a sale of their leases to their landlords:
- Yorkdale Shopping Centre in Toronto, ON
- Square One Shopping Centre in Mississauga, ON
- Sherway Gardens in Toronto, ON
- London-Masonville Place in London, ON
- Markville Shopping Centre in Markham, ON
- Richmond Centre in Richmond, BC
U.S. Retailers Look North These six locations are some of the top-performing shopping centres in Canada. After Sears vacated, leaving the stores open for immediate occupancy, American luxury department store chain Nordstrom was quick to seize the opportunity. Five of their six planned Canadian stores will be in former Sears Canada spaces. Additionally, luxury retailer Saks Fifth Avenue is also planning to open seven Canadian locations, with two of these in Toronto. Saks was purchased by Hudson's Bay Co. in 2013. Increased Wealth = Changing Consumer Habits Prior to the recession in 2008, wealthy Canadians were considered far more reserved than their U.S. counterparts. However, after a steady diet of stock market gains and rising home values, Canadians have shown a willingness to spend on premium brands, to the tune of $6.5 billion on luxury and mid-range luxury goods in 2013. This accounts for a 14per cent increase from the spending figures in 2008. Canadians' growing affluence, along with the availability of prime commercial real estate, are the central reasons U.S. retailers such as Saks Fifth Avenue and Nordstrom are expanding into a market that has long been dominated by incumbent Canadian retailers Holt Renfrew and Harry Rosen. The Nordstrom and Saks expansion will bring fresh opportunities for Canadian luxury shoppers to spend their money in Canada, rather than enduring the inconvenience of shopping in the U.S. It will also force Holt Renfrew and Harry Rosen to become more competitive in the face of increased competition on their home turf. Canada Remains Open for Business The Canadian commercial real estate landscape continues to evolve at a brisk pace, with departing players such as Zellers and downsizing incumbents providing new opportunities for U.S. retailers. Fuelled by ongoing consumer enthusiasm for American brands, Canadian consumer confidence is steadily increasing, along with their home equity and net worth. The overall positive growth will help stimulate consumer spending, with many local shopping centers, restaurants and do-it-yourself home renovation stores being the main beneficiaries.