Shopping centre landlords across Canada are increasingly redeveloping their underutilized parking lot land and adding a residential component to their properties.
The latest is Cadillac Fairview, along with its partner SHAPE, who recently announced their joint rezoning submission for the first phase of a new Master Plan that anticipates a series of developments, which will ultimately surround and complement its landmark property CF Fairview Mall, creating a vibrant, new community in North Toronto.
The first phase of development is located at the doorstep of the Don Mills Subway station, on the South side of the shopping centre fronting onto Sheppard Avenue East. This phase is approximately 1.1 million square feet of mixed-use development, which will consist of three new buildings, two condominium towers and one CF rental residential building, with retail and amenities. A new pedestrian urban plaza, the “Village Green” will be situated between the TTC and the residential buildings, providing much improved pedestrian access for the entire community living, working, and shopping in the area. The rezoning application required to permit the Phase 1 development has now been filed with the City.
“Canadian shopping centre owners are densifying their properties at an unprecedented pace to unlock value that has been held within components of their properties such as underutilized parking fields and low-density anchor store spaces,” said Michael Kehoe, broker with Fairfield Commercial Real Estate.
“This strategy syncs up perfectly with transit-oriented development trends and the demand for residential housing and other mixed-use structures that will add important amenities to the communities where they are situated and drive traffic to the retail and food service components of the projects.
Major mall ownership and management teams in Canada are the masters of densification that keeps these properties relevant to the consumer and a blue-chip commercial real estate investment over the long term.”
“I think we will see more of this, particularly in larger cities as space is at a premium and demographics line up nicely with this approach. Many younger Canadians cannot afford a house and do not want to spend hours commuting to work. They also want convenience, and this trend offers that. They want to live, play and potentially work in the same location,” said Winder.
“The trend to mixed-use malls allows numerous stakeholders to benefit. Landlords significantly increase the eventual cash flow and thus value of the properties, builders make money on the construction, governments get additional taxes and can say they create jobs, commercial tenants receive greater sales with a captive customer base and residential tenants get convenience and a new supply of housing. Finally, the environment benefits as citizens use less fuel as they are closer to mass transit and may not need a vehicle.”
But Winder said potential negatives of this trend include heightened congestion as population density increases significantly, difficulty finding a place to park if you drive to the mall and finally, greater lack of affordable housing as many of the units in these new builds are middle to high priced.
George Minakakis Principal of advisory firm Inception Retail Group Inc., and author of The New Bricks & Mortar Future Proofing Retail said C tiered centres have a number of empty locations more than in 2019. B tiered malls have some empty stores and a number of unfamiliar store operators with temporary looking storefronts. Of course the A malls are still drawing healthy traffic where the rest are not enjoying the same volumes. Their only choices now are to evolve.
“Shopping centres across North America are in need of either a renewal, redevelopment or complete repositioning strategy. The redirection they take all depends on the shopping centre, its current performance, existing demographics and the potential for continued growth,” he said. “Many have been talking about mixed use for the property shopping centres sit on. But that doesn’t mean all of them will see the same kind of redevelopment or success and it could take years. A lot more changes can happen in the retail industry both from consumers and disruptive technology being introduced. Yes, we should expect a lot more changes coming.
“Retail has been undergoing a lot of competitive threats. As a result, retailers have been rationalizing their store counts and simultaneously growing e-commerce, coupled with economic and consumer behaviours today. And so many malls are aging, they are all generally identical in their representation of retail offerings and not as exciting. There is also a convenience factor to consider. Fairview is an ideal centre to develop given its location and access to commuter transportation.
“Obviously, in the case of this shopping centre, redeveloping the available lands to create a community where you live, shop and potentially can work in, fits with the changes the pandemic has brought about along with a growing community of gig workers. Depending on the demographics you can bring back new life to shopping centres that are tired. Traffic drives sales and profits. And developers are bringing more value to their land holdings.
“The only negative is that it may not work for all. I am an advocate for turning malls into different specialty categories, for example some just furniture, others technology and some just services and health and wellness. We have to reimagine all of this or it will be more trying the same and failing. Even if it doesn’t work out, the space used for commercial uses could also be converted to residential development. “
CF Fairview Mall, Canada’s first two-storey mall, is currently completing a previously announced $80 million renovation and revitalization dedicated to transforming 230,000 square feet of existing department store and other retail space, including T&T Supermarket outlet, to introduce brands, restaurants and improve pedestrian access to the property and the nearby Don Mills subway station. The mall renovation is expected to be completed in late 2022.
“For more than 50 years, CF Fairview Mall has been a community hub in North York, serving the evolving retail, transit, entertainment and service needs of the local area residents and businesses. As our longest operating shopping centre in the GTA, the Master Plan redevelopment extends our long-term vision and supports an expanding demographic seeking convenient, high-quality, and accessible residency in a dynamic, transit-connected community,” said Wayne Barwise, Executive Vice President, Development, Cadillac Fairview.
“SHAPE could not be more excited to expand into the Toronto market alongside our valued partner, Cadillac Fairview. Following our incredible success with RC at CF Richmond Centre, we’re ready to raise the bar, engage the local community and set a new standard for urban living with the complete reimagination of CF Fairview Mall,” said John Horton, President and CEO, SHAPE.