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Ottawa Retail Leasing Seeing Rebound After Substantial Pandemic Drop: Report/Interview

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Although Ottawa’s retail leasing activity was down 30 per cent for 2020 as a whole, the second half of the year showed strong signs of recovery as leasing volumes rebounded quickly, reaching the same levels as the second half of 2019, says a new report by commercial real estate firm JLL.

The market achieved a new equilibrium as available space remained flat in Q3 and Q4 ‒ the trend to move out remained only slightly stronger than the trend to move in. While the trend to move into streetfront locations was strong, the trend to move out of malls and neighbourhood centres was stronger, it said.

“Ottawa asking rents for available space have stabilized, only moving sideways. However, effective rents for the province decreased nine per cent due to base rent concessions and growing adoption of per cent sales agreements,” said the report.

Paul Ferreira

“The 2021 outlook remains positive, as leasing remains as active as pre- pandemic. With new supply under control, asking rents and available space should remain stable.”

Paul Ferreira, Senior Vice President of Retail with JLL, said the suburban outdoor retail for the most part fared okay because many of the essential retailers were open during the pandemic. And retailers also responded with curbside pickup and delivery.

“From a retailer’s perspective it was very similar dynamics to what we saw in the other major markets. And then you had the difficulty for the malls in being closed down for so long. Obviously Ottawa was closed down less with a little bit lighter restrictions through 2020 and the early part of 2021 than Toronto did. So they had a little bit more opportunity to be open,” he said.

“And we had the same lack of traffic in our downtown core.”

That traffic was impacted by the move to having more people work from their homes instead of their offices as well as a downturn in tourism.

The JLL report said Ottawa retail sales accumulated consecutive months of year-over-year growth during the second half of 2020. In aggregate, 2020 retail sales decreased only 1.2 per cent ‒ the second-best record across major markets.

“Ottawa’s Rideau Street reopened this December after five years for renovations to the Rideau Centre and construction of a new light rail station. The stretch between Sussex Drive and Dalhousie Street has become more welcoming, with expansive sidewalks, separated bike lanes, and more trees,” it said.

“After a brief relief, in early spring of 2021, the third wave made authorities again close non-essential retailers (including restaurants and bars), who could sell only through curbside pickup, delivery, and take-out. The major difference this time is that discount and big-box retailers are limited to selling only essential items.

“This April, pedestrian traffic was down 45 per cent from pre-COVID baseline for retail and recreation, almost 70 per cent down at transit stations, and 60 per cent at workplaces. On the other hand, Ottawans have spent more time at home.”

Ferreira said the outlook for the retail market in Ottawa is positive as the province moves toward more openings and experiences a rise in the number of COVID-19 vaccinations as well as a decline in cases.

“A lot of Ottawa’s tourism is local Canadian and with the lack of opportunity really and comfort to travel internationally it will benefit from that position as we open up through the rest of the summer. And hopefully we’ll see a larger influx than we would if international travel was available to people. So we’re hopeful that that is something we see come back this summer,” he said.

“Our early indications from mall reopenings in Quebec and the West there’s a return to some very strong mall traffic and sales numbers. So we’re hoping for that in the malls in Ottawa as well.”

“We’re going to have to see a little bit of a stabilization in the malls themselves before we’re going to see a lot more new entrants to the market. I think it’s going to take a little bit of time to see that happen but eventually I think it will.”

Following a successful opening in Oakville in 2019, Maine-based L.L. Bean opened a location in Ottawa Train Yards last fall. The retailer continues to expand in Canada with Ontario locations in Barrie and Toronto, as well as in Halifax, NS, said JLL.

Image: OVO Rideau

October’s Very Own (OVO) opened its first Ottawa store on the second level of CF Rideau Centre, between the Apple Store and Aritzia. In addition, Canada Goose opened on the third floor of the shopping centre,” it said.

“Although most Ottawa visitors are travellers from within Canada, tourism spending fell dramatically in 2020 with meetings and conferences being held online. Ottawa’s advantage is that domestic travel should rebound more quickly than international. In 2019, Ottawa experienced a peak in tourism.

“Leading discount retailer Giant Tiger recently opened the doors to a new and redesigned flagship store on Walkley Road at the same site as its office headquarters.”

As part of its five-phase plan, LeBreton Flats started to take shape in Q1 with a new pathway between Pimisi and Bayview stations and the construction of two towers on the east portion of the site. In terms of retail, the developer has laid out plans for a main street-style boulevard, ultimately including food services, pharmacies, and other essential services on the strip, said JLL.

“RioCan kicked off the preliminary phase of the redevelopment of the Lincoln Fields Shopping Centre site, which includes the demolition of the old 250,000 square foot mall building and construction of a total of 45,000 square feet in retail between a new two-storey building along Carling Avenue and a new-single storey Metro store in the middle of the property. The idea is to turn the site into a high-density mixed community.”

Article Author

Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior National Business Journalist with Retail Insider in addition to working on his own as a freelance writer and consultant in communications and media relations/training.

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