Metro Vancouver retail tenants ‘hard-pressed’ to find space
Some Metro Vancouver consumers might be pinching their pennies but this hasn’t weakened the region’s retail real estate market.
Average vacancy in high traffic areas such as Robson Street, Yaletown and Kitsilano remained unchanged at 3.9 per cent when compared to June 2023, according to a Jan. 24 report from Colliers Canada.
Across the Metro Vancouver region, average vacancy decreased from 1.5 per cent to 0.7 per cent since last summer, leaving hopeful tenants “hard pressed to find suitable options.”
“Retailers have shown a resilient front as evidenced by an overall decrease in retail vacancy rates. Demand for retail space remains strong with marginal changes in vacancies and will likely remain strong in the coming year,” said the report.
While this is about Vancouver, I think many Canadian cities are the same. The article stood out to me because so often we hear of retail death, downtowns emptying out, crime and disorder increasing. So the takeaway we assume is that retail is dead. But actually going downtown and just exploring, you see this is totally false. Many areas are very lively, and storefronts full. And malls are much fuller in Canada I think, especially compared to the States. The suburban mall death in America has been happening for quite some time, and pre-Covid it was already heading down. But pre-Covid, downtowns in places like New York and San Fran were doing good, the suburban mall pain wasn't afflicting the urban cores. Flash forward to today, and the urban centres are now the big losers. San Fran especially, it is truly sad to see the decline. It's so rampant now, it's just day after day stores are closing and it's like Detroit or something. People will debate the main culprit, depending on personal views. Some will blame homelessness/drugs/crime as the main factor, while others blame the steep drop-off in office workers, creating empty offices, no patrons for restaurant lunches, errands, all the things that are supposed to make a downtown pulse. It is a combination of both, hand in hand, chicken and the egg. Americans had basically accepted the suburban mall death, but the downtowns are dying now too. It's a weird situation to be in when both suburban and urban are suffering, means a real pullback in demand. I guess the stats showing many big cities shrinking is consistent with the downtown declines, but this is insane. If you google San Francisco store closures, you will see how bad it is. Coffee shops, clothing, grocery, drug stores, everything closing. Here's a link from June, since then this has gone way up:
https://images.app.goo.gl/AVSNHdLKBvWVLGyXA
People also blame the city council, police, basically the entire system. But it's business at the end of the day, so the combination of crime, theft, no office workers, and no one coming into downtown has created this. And it will be very hard to come back from when it is at this scale, we're talking Whole Foods, a Hilton Hotel, Nordstrom, Saks, a movie theatre, all the smaller stores like Lululemon, Williams Sonoma, Crate and Barrel, H&M. The Whole Foods closed after just ONE year, one. Imagine building out an entire store like that just to close in 12 months. Whole Foods isn't like a small mom and pop outfit, those places come and go all the time. But big chains don't, they normally stay in new stores for a long long time.
My long drawn out point is, we really should be considering ourselves very lucky in Canada to not suffer the same fate as cities like San Fran. But it is absolutely not a reason to be happy and complacent, it should be watched very closely by politicians all over as what can happen when things spiral. It's a slippery slope from doing OK to nosediving, so people need to be aware of the factors that could lead to an SF situation here in our cities.
Don't forget, the poster child for decline was always Detroit. Poor, down on their luck, rusty Detroit. Just like dozens of midwest cities "rust belt", it was bleak news of closures, population flight, crime, abandoned properties. But these cities were never glitz, rich, or cutting edge, they were always pretty working class. So when they declined, it was very sad for the people there, but people on the coasts or in booming states like Colorado or Texas didn't really relate. Now all of a sudden it is San Francisco; rich, inventive, expensive, in high demand San Francisco. Where average incomes are sky high, the GDP per capita is sky high, tourists flock and stores appeal to wealth. Yes it's always had seedy dark corners and sketchy neighbourhoods, but it existed in its own space, and downtown was bustling. Cities like San Fran are not supposed to experience what Detroit has, it would have been unfathomable only a few years ago. I truly hope it turns around and they get back on track, it's a great place still overall, too good to be dragged into becoming a ghost town...
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