The rebound of the global retail market, including its luxury segment, has pushed leasing rates upwards around the world. Canada’s high-end shopping corridors were not exempt, according to Colliers International’s 2013 Retail Report. While Toronto’s Bloor Street remains the most expensive haute couture destination in Canada with an annual lease rate of US$315 per square foot (1.6 per cent increase), it was Western Canada’s high-end retail strips that experienced impressive growth.
Vancouver’s Robson (US$200, 33.3 per cent increase) and Alberni (US$150, 43 per cent increase) streets, Victoria’s Johnson Street (US$35, 18.6 per cent increase), Calgary’s 4th Street SW (US$60, 9.1 per cent increase) and Saskatoon’s Broadway Ave. (US$30, 11.1 per cent increase) all experienced a double or near double-digit increase in lease rates over the past year. These figures are in stark contrast to Eastern Canada, where many premium locations remained unchanged or even saw a decrease in lease rates such as Montreal’s Rue de la Montagne (US$60, 25 per cent decrease) and Halifax’s Spring Garden Rd. (US$60, 7.1 per cent decrease).
“Canada’s major market high streets are generally pretty healthy. Increasing rental rates can be a sign of growing confidence on the part of retailers and their ability to sell goods; and even in some cases where rates have dropped, we could attribute this shift to backfilling of vacant units or larger space deals that have completed at lower rates per square foot – both of which can be a good thing,” says James Smerdon, Vice President, Retail Consulting with Colliers International.
“The influx of U.S. chains and luxury brands into Canada, specifically to the West, contributed dramatically to the spike in lease rates along the highly coveted retail locations in Western Canada,” adds Mary Mowbray, Senior Vice President, Retail, with Colliers International. “This trend, coupled with relatively low lease rates in Canada, compared to other high-end streets around the world, has not gone unnoticed by luxury brands and retail chains that are looking to set base and leverage our growing buying power while paying relatively low overhead.”
The attractiveness of Canada’s high-end shopping strips can be illustrated by the marked difference in lease rates between domestic, top-ranked Bloor Street and other premium spots around the world that topped the Colliers International list this year. Retailers that set up shops in New York’s Fifth Avenue (US$3,052), Hong Kong’s Queen’s Road Central (US$2,087) and Canton Road, Tsim Sha Tsui (US$1,994), New York’s Madison Ave. (US$1,325) or London’s Old Bond Street (US$1,223) pay between four to ten times the lease rate for the same floor space of premium locations in Canada.