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PRIYA SHARMA
Century 21 Signature Realty
#207, 2920 Calgary Trail NW, Edmonton, Alberta
P: 780-485-2100
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Sunday, January 22, 2012 - Edmonton leads country in retail construction

 

EDMONTON - More retail space is under construction in Edmonton than anywhere else in the nation, says a new report by commercial real estate firm CBRE.

“This energy-based economy is really driving a lot of things in this city from residential construction to industrial demand and when there’s low unemployment, people are buying so retailers are strong,” said Dave Young, senior vice-president and managing director of CBRE’s Edmonton office.

“Will the other shoe fall? I don’t know, but right now and going into 2012, we’re pretty bullish on all markets and retail definitely will be strong for the coming year.”

The Edmonton region has 2.8 million square feet of retail space under construction, according to CBRE’s Canadian Retail Market View report.

Of that, about 1.8 million square feet is expected to be delivered in the second half of 2012.

“It’s all over the city, the southwest, the northwest, out in Sherwood Park, out in Spruce Grove,” Young said.

“It’s really in all areas of the city.”

The city’s overall retail vacancy rate is about 3.1 per cent.

Young said Edmonton’s million-plus and diverse population spurs retailers to build multiple stores and more foreign companies such as Cabela’s are attracted to the market.

Edmonton is bucking the national situation, which has seen a steady decrease in development activity, says the CBRE report.

Only 3.6 million square feet of new retail space was completed in 2011 in Canada, the lowest amount since 2005, said the report.

“Retailers are often unable to find space in popular, well-located shopping centres, but this has not spurred an increase in development,” the report said.

For 2012, CBRE says there is potential for 8.5 million square feet of new supply if all projects get underway.

When it comes to retail under construction, Western Canada has 6.1 million square feet, compared with 3.4 million square feet in Eastern Canada. CBRE says lower unemployment, higher disposable incomes and projected population growth are driving development activity in the West.

The Canadian retail market is seeing strong sales and continues to attract foreign retailers, the report said. Vacancy rates also dropped significantly in 2011 compared with 2010.

But the Canadian retail market faces global and domestic headwinds, the report said.

“The low amount of development activity suggests that developers and lenders are aware of the challenges that exist.”

It said Canadians’ household debt-to-income ratio hit a high of 153 per cent in the third quarter of 2011 and wage growth is lagging behind inflation.

“Canadian consumers have not faced these sorts of challenges in well over a decade. As a result, the recent pace of spending is likely unsustainable.”

A report released Thursday by Ernst and Young also concluded Canadian retailers face numerous challenges in 2012, including an influx of foreign companies, weak consumer sentiment and decreased consumer buying power.

“Retail sales are expected to rise marginally,” said Daniel Baer, Ernst and Young Partner and National Retail Industry Leader.

“Meanwhile, higher gas prices, taxes and costs for groceries and certain manufactured goods will further erode buying power and combine to squeeze retailers’ bottom lines.”

 

posted in General at Sun, 22 Jan 2012 11:12:31 -0700



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