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The Canadian retail landscape has been turned upside down.
Lockdowns and social distancing had a sudden and profound impact and tenants and landlords are struggling to adapt. But it’s not all bad news!
CBRE’s Canada Retail Report provides reasons to feel good about the prospects for retail in the months ahead.
Here are six:
1. Core retail sales are recovering
Core retail sales, which exclude auto and gas sales, increased 0.4% in August. This follows a record 18.9% decline in April, the lowest point in the COVID-19 crisis. Year-to-date, sales growth is actually up 1.7%.
2. Food and beverage sales up
Bad news for some is a boon for others. Food and Beverage store sales have led year-to-date growth, up 10.1%, as Canadians stocked up and dined at home.
3. Vacancy creates opportunity
The national retail vacancy rate has increased from 3.1% to 4.1% over the course of the year. With more vacancy anticipated, there will be new opportunities for existing and emerging concepts, even in high-profile locations, compared to the past.
4. New projects coming
Despite construction delays in the first half of 2020, 1.3 million sq. ft. of new shopping space has been completed. If other projects remain on schedule, an additional 3.2 million sq. ft. could entice shoppers the second half of the year, a half-year high not matched since H2 2016.
5. E-commerce adoption hits hyperdrive
The temporary closure of non-essential businesses shifted shopping online in a major way. Initially expected to increase 1.6% and represent 12.0% of retail sales in 2020, new forecasts anticipate that online penetration will increase 3.1% this year to 13.5%.
6. Conversions and repurposing
As consumer habits change, we could see new formats emerge that bridge the online and real world shopping experience more seamlessly. This could include the conversion of some sites to warehouse for delivery and click-and-collect shoppers. More new options for shoppers!