Mario Toneguzzi, Calgary Herald
Uncertainty related to declining oil prices isn’t affecting the appetite of retailers wanting to set up shop or expand in Calgary.
A report by Barclay Street Real Estate indicates that in the last six months of 2014, retail vacancy rates in the city dropped from 2.7 per cent to 2.2 per cent and nearly 14 million square feet of new retail development is either being proposed or currently under construction.
“For a long time Calgary was in a bubble,” said Jonathan Gheron, a retail associate with Barclay Street. “Our economy has been thriving. There’s competition for current good space and the additions of this space I believe most of it will get absorbed.
“Overall, the consensus for Calgary is still positive. There’s still people who want to come here and open stores. The economy the way it is, is unfortunate but we haven’t seen a slowdown in retail. It’s still a very active market.”
The report said American retailer Target’s departure from Canada will skew the current vacancy rate, roughly doubling the total vacant space in Calgary, as an estimated 725,000 square feet of retail space will come back on the market with the closing of these stores.
Total inventory at the end of 2014 was 36.3 million square feet, with 793,220 square feet vacant.
The report said vacancy rates will likely increase to 2.5 per cent by the end of the second quarter of this year.
Jamie Lefebre, retail associate with Barclay Street, said there may be opportunity in Target’s departure from Canada.
“The traffic flow to the shopping centres wasn’t as high as the neighbouring tenants would have liked,” she said.
“So although it may be tough on the remaining tenants in the shopping centres at first in the transition period between Target and the new tenant, a new tenant might actually provide an opportunity for an anchor store that may bring more traffic. So it may actually be a really positive change.”
The Barclay Street report said many 10-year retail leases are approaching the end of their terms and tenants who were paying $25 per square foot can expect rates closer to the $40 mark on renewals in sought-after spaces.
“The substantial increase in rental rates will result in many tenants choosing not to renew lease contracts and instead opting to relocate to the suburban locations or smaller spaces within the same community,” it said.