“Ridiculous” Empty Store Tax Proposal Could be Bad News for Vancouver: Interview with Martin Moriarty

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A proposal to look at a potential empty store tax in Vancouver is ridiculous, says one of the city’s commercial real estate experts.

Martin Moriarty, Senior Vice President, Investments & Leasing, Marcus & Millichap, said he is bewildered by the proposal.

Martin Moriarty

“For us to come out of such a challenging global circumstance and this idea of nonchalantly taxing vacancy in retail markets that are recovering I’m not quite sure what the purpose, reasoning of it is,” he said.

“I think it’s unfair, unreasonable, ill–researched and ill-advised. I think it’s a crazy concept. The idea of slapping on another inefficient tax which doesn’t solve the problem seems to be the hallmark of this city council and I’m a bit amazed, at least from what I understand, very few stakeholders, whether that be landlords, owners, investors, tenants, brokers, were consulted on this.

“And for all of us, we’ve been taken aback.”

Former NYX Cosmetics Location in Downtown Vancouver at 1092 Robson Street (May 2022). Photo: Lee Rivett.
Former Downtown Vancouver John Fluevog Location at 837 Granville Street (May 2022). Photo: Lee Rivett

Vancouver is looking at the potential of instituting such a tax. In a tweet, Vancouver Mayor Kennedy Stewart said: “Just like homes, commercial properties have skyrocketed in value, yet many are kept vacant.”

The idea is similar to an empty homes tax the city implemented in 2018.

“We’ve got to end this kind of speculation. If we do this right, it would mean lower rents for small businesses,” said Stewart in a Vancouver Sun story. 

“The good ones don’t have to worry. They have to tick a few boxes every year … say ‘here’s my lease, here are my ads, I’ve been trying to fill this space’.”

Former Nosh Restaurant and then Laboratory – Sous Vide Cuisine Inc. at 575 West Georgia in downtown Vancouver (May 2022). Photo: Lee Rivett.
Vacated Chopard Location in Downtown Vancouver at Cathedral Place Building at 925 W Georgia Street (May 2022). Photo: Lee Rivett

The Sun reported that a 2020 report by city staff found that the proportion of vacant storefronts in four out of six Vancouver neighbourhoods has grown past 10 per cent. Across six neighbourhoods, the number of owner-occupied businesses decreased by 16 per cent from 2012 to 2019, while the number of storefronts owned by numbered corporations increased by 41 per cent and the number owned by developers increased by 71 per cent.

From a property owner perspective, there’s been a steady increase over the years already in property taxes. 

“It’s complex. How long is a reasonable time for something to be vacant? Are all markets the same? Are all retail streets the same? Are all zoning areas the same? Is it the same for all genres of ownership whether it be an individual or private investor or whether it be an institution?,” said Moriarty.

“There’s quite a lot of variance here so it seems to be in my opinion headline seeking without really any careful thought or any due attention to the actual problem.”

Closed and Vacated Downtown Vancouver Retail Space at 778 Robson Street (May 2022). Photo: Lee Rivett
Former Café Crêpe at 874 Granville Street (May 2022). Photo: Lee Rivett.

Moriarty wondered what it would mean for a building that is awaiting a development permit or even a tenant awaiting a permit for work on their space. 

“I truly hope this does not go . . . I think there would be a lot of pressure on individual owners. If we peel it back and there is a tax on vacancy, I’m not sure it makes things more affordable. I’m not sure the people have thought about the actual consequences,” he said, adding owners of vacant space might just lease it out to anyone and how would that impact the overall retail street. 

“There’s a lot that hasn’t been thought about and the more I think about it the more I think it’s a crazed concept. The more I think about it the more I try not to think about it.”

Previous Lacoste store (then Shoe.com, then Bell store) at 779 Burrard Street (May 2022). Photo: Lee Rivett.

For the most part, the retail sector in Vancouver has fared generally very good in the past two years through the pandemic.

“I think against the backdrop of a global pandemic Vancouver has performed tremendously well compared to Canadian urban markets, North American markets or even globally. We have seen vacancy like everyone else, but probably not to the same extent that has been seen in the bigger urban markets of North America,” said Moriarty. 

“I was in Los Angeles (recently) and I was a little taken aback by the vacancy problems there. Vancouver is a relatively small market compared to some of these gargantuan cities but I think pound for pound Vancouver has punched well above its weight.”

Article Author

Mario Toneguzzi
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 News Editor with Retail Insider in addition to working as a freelance writer and consultant in communications and media relations/training. Mario was named as a RETHINK Retail Top Retail Expert in 2024.

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2 COMMENTS

  1. You have to hand it to the politicians. Even the most hardcore mafia members never found a way to charge protection money on vacant stores.
    This is outrageous and will create unwanted chaos in the retail market.
    The people who proposed this tax never owned a piece of property in their lives.

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