Mario Toneguzzi, Calgary Herald
Calgary’s retail real estate sector has remained resilient this year in the face of a slumping economy hit hard by depressed oil prices.
A new report by Barclay Street Real Estate in Calgary says the vacancy rate in the market has only gone up from 2.18 per cent to 2.29 per cent in the first six months of this year despite a gloomy economic scenario,
“Though Albertans are not out of the woods yet, there are many reasons to remain hopeful and to believe Calgary will continue to be one of the most profitable retail locations in Canada,” said the Retail Space Market Review Semi-Annual 2015 report by Barclay Street Real Estate.
“Competition for retail space in Calgary continues to be intense. Despite the volatility of Alberta’s economy in the first half of 2015, there has not been a great deal of retail space that has come available to the market, aside from the six Target locations and the two Future Shop locations in Calgary.”
“For the most part, developers have remained confident in the Calgary market and are continuing to move forward with plans. Not only are developers planning to move forward with previously planned projects, they are also continuing to announce plans for new development projects across the city. Given the costs involved with these substantial developments, it is clear that developers recognize that Calgary is and will continue to be a desirable location for retailers and restaurant owners.”
Jeff Robson, vice-president, associate broker and retail team leader with Barclay Street Real Estate, said the vacancy rate will continue to go up but it won’t be as bad as the last recession back in the 2009 period.
“We had it up to about five per cent. I don’t think it’s going to go up to that number. We might see three, three and a half (per cent) by the end of this year. It’s a combination of people holding off on making decisions. The reasons we hear is a change of government, the increase in minimum wage and the impact that might have on retail, foreign labour and a general uneasiness about the economy and where oil’s at,” said Robson.
The report said there has not been a slowdown in the development of retail centres and mixed-use buildings in Calgary since the beginning of 2015.
“Developers have demonstrated a concerted effort over the last few years to move away from the sprawl model and focus largely on developing inner-city sites. This change has been driven by the fact that a sizeable portion of Calgarians desire to live closer to downtown,” said the report. “In addition to the appeal of living close to the abundant amenities downtown, many Calgarians are wanting to buy downtown condos because they want to downsize and spend less money on housing so they have more money to spend on entertainment and travel.”
It said the vacancy rate has increased because in recent months a number of retailers have announced they were closing their stores resulting in several large retail spaces becoming available.