Article
Shop from Away: Migration Creates New Opportunities and Pressures for Atlantic Retailers
September 15, 2023 5 Minute Read
The East Coast is buzzing with activity as waves of new arrivals flock to its communities, seeking job opportunities and a vibrant, but liveable lifestyle.
With more residents comes more demand for shopping and services. And while East Coast retailers are eager to cater to the needs of newcomers, the larger cities like Halifax are experiencing a significant retail space shortage. This, along with record high construction costs, is driving rental rates higher and putting pressure on the existing supply of retail space.
“The population is booming, giving the East Coast a new appeal and retailers new opportunities,” says CBRE’s Rebecca Todd, who does retail deals across Atlantic Canada. “But the lack of attractive retail space is a big challenge for entrepreneurs.
“So forward-thinking retailers are expanding their searches beyond the major cities and finding profitable opportunities in secondary or even tertiary markets.”
Eastward Exodus
The East Coast experienced a new influx of migration during the pandemic. With the ability to live and work from anywhere and facing steep housing prices in larger cities, many Canadians opted to move eastward.
“Young people want to settle down but can’t afford homes in larger markets like Toronto or Vancouver,” says Todd. “So they come to the East Coast, where housing is more affordable, there are plenty of job opportunities and they can enjoy a higher quality of life.”
The average home price in Atlantic Canada stood at just over $435,000 in July 2023, while Ontario’s average surpassed $856,000 and British Columbia’s neared $968,000.
While Atlantic Canada’s housing price index rose 17% since 2019, prices there remain far below the Canadian sale price average of $669,000 in July 2023.
The East Coast has seen an influx of interprovincial migration, with the biggest wave coming from Ontario. New Brunswick saw its number of Ontarian migrants increase by over 223% between 2020 and 2022.
Halifax’s population grew 9.1% between 2016 and 2021, making it one of the fastest growing cities in the country. Of the 9,200 new residents who moved to Halifax in 2021, 60% had moved from other Canadian provinces, and over 40% were between 20 to 34 years old.
But Canadians aren’t the only ones moving to the East Coast. The Atlantic Immigration Pilot Program has helped attract and retain skilled foreign workers to New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.
Launched in 2017, the pilot program connected East Coast employers hiring for jobs they couldn’t fill locally with international graduates and skilled foreign workers, and then facilitated the immigration process.
The pilot program was a success and in 2022, the Atlantic Immigration Program was made official.
Retail Ripple Effect
Increased immigration is driving demand for goods and services across the Atlantic Region. But the supply of retail spaces is limited.
“A lot of new retail deals being completed in Halifax are on the ground floor of high-rise towers and mixed-use projects,” says Todd. “The majority of the city’s commercial strip plazas and grocery-anchored properties are fully leased, which is new for our market.
“Even markets like Sydney (on the east coast of Cape Breton Island) have minimal retail vacancy in commercial areas.”
A few major retailers have managed to secure deals in cities, including some new market entrants.
In 2021 U.S.-based outdoor retailer L.L. Bean made its foray into Atlantic Canada with its first location in Dartmouth, N.S., followed by a second store in Moncton, N.B. in 2022. More recently, Quebec-based fashion retailer Simons announced it will be opening its first Atlantic Canada store in 2024, in a former Sears space at the Halifax Shopping Centre.
Rising Rental Rates
But deals in primary markets can cost a pretty penny. According to CBRE’s H1 2023 Retail Rent Survey, Halifax witnessed rental rate increases in five of its eight retail formats in the first half of the year.
“Some retailers are putting their leasing plans on hold to see if prices cool down,” says Todd. “But ambitious businesses are exploring new avenues for growth in the suburbs and rural areas, where rents are more affordable and there is more available space.”
“I’ve seen a lot of activity from restaurant franchises led by entrepreneurial immigrants,” adds Todd. “They’re very driven and eager to find new opportunities across the East Coast.”
Canadian-based franchises A&W, Mary Brown’s, Pür&Simple and Mezza Lebanese Kitchen are all expanding on the East Coast.
Restauranteurs aren’t the only ones looking at secondary and tertiary markets. Todd says small format grocery and box stores such as Dollarama, TJX Canada, Giant Tiger, Pet Valu and Shoppers Drug Mart are also branching out farther afield and looking for opportunities in growing markets.
"Smaller markets offer a unique opportunity for retailers to cater to a growing population without having as much competition as they would in larger locations,” says Todd.
“There's a wealth of untapped potential to discover if you go just a little bit off the beaten path. The path to the East Coast is now well worn, but we’re just beginning to leverage these new opportunities for retails.”
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