Canadian Shopping Centres Changing as Landlords Look to Revamp Retail Offerings and Add Mixed-Use and Development: Expert

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Yesterday’s mall was a place that acted as a shopping destination for consumers.

But the mall concept has evolved over the years and the mall of tomorrow will become more of a hub of daily life consisting of a social gathering place, food and entertainment, fulfillment and logistics, discovery and recreation – and of course shopping.

John Crombie, Executive Managing Director, Retail Services, Canada, Cushman & Wakefield, who gave a presentation on the topic at the recent Land & Development Conference in Toronto, said in his report that In 2015, 72.7 per cent of a mall was retail. By 2020, that had shifted with retail decreasing to 65.8 per cent.

Rendering: Simons at Halifax Shopping Centre
John Crombie

“You’ve got to look at it historically where the mall originally was. The landlord owned it, rented the space to a tenant, a retailer, and then the retailer dealt with the customer. It was very linear in terms of its arrangement,” he said.

“I think now, and this is where technology has certainly come into play, and how landlords need to look at the business differently, the landlords now need to be and have been more involved with understanding the customer base in as much as the retailer understands the customer base. A lot of it has to do with marketing their properties. If you’re going to be attracting retailers, you have to understand who your demographics are, the customer profiles and then you want to ensure getting the right tenant mix. That there’s complementary retailers and there’s a lot of cross sales opportunities. 

“Landlords need to get more engaged that they’re as much in the customer service as the retailers and it’s creating this environment that’s appealing to them. It’s as simple as having events which is obviously a great draw of business from Mother’s Day to Christmas events and Santa Claus, to having areas where people can enjoy times together and realizing that food is becoming a huge component of that.”

Lined with publicly accessible, diverse open space and a bosque of trees, the pedestrian promenade is a unique landscape feature which creates a connection between Etobicoke Creek and the new urban centre. (Image Courtesy of BDP Quadrangle / SvN Architects + Planners)

Crombie said landlords also have to pay more attention to the food mix in their properties. 

Crombie’s presentation, What Lies Ahead For Retail Real Estate In Canada: A Look at the Current Market & Future Predictions, outlined the following predictions for the future of retail:

  • Tenant mix will shift to more non-retail uses and food;
  • Omni-Channel is the future for physical stores;
  • Upbeat on revenue growth for Canadian retailers in 2022;
  • Better efficiencies and technology in stores;
  • Long live the automobile in a post COVID world;
  • Shoppers will shift more spend to secondhand products;
  • More retailers will sell into the metaverse world; and
  • Revival of experiential retail.

Also, Crombie said that by default we’ve seen the shift in malls. While many retailers are all right sizing, they can be as productive in a smaller footprint. We’ve also had the demise in Canada and the United States of department stores with Hudson’s Bay being the sole remaining Canadian traditional retailer.

“And so as landlords, you have to look at that old dumbbell. A department store anchor on each side and shops in between. Well, without department stores what do you do? So you’re forced to look at smaller boxes or to eliminate that and move towards things that will drive people to your shopping malls to create that (foot traffic),” said Crombie.

“Unfortunately with e-commerce nipping at retailers’ and landlords’ sales, and that’s a big concern for them, how do they drive more traffic into the malls. They have to be much more understanding that they’ve got to be as much of a traffic driver as the retailers are a traffic driver.

“The best thing about retailers and landlords is that they have an ability to be innovative and try new things. Some things don’t work and some things do work. The pandemic as we all know has been the big accelerator for a lot of these changes. I still think the idea of a shopping mall to cater more to the last mile delivery, we need to do more of that in what’s happening in the malls. I think you’ll continue to see a huge growth in that area. The buzz word is omnichannel. From a landlord’s perspective, they also need to think more omnichannel.”

Crombie said the industry has missed out on the excitement of shopping in the last couple of years during the pandemic. That needs to be reinvented. 

Marché Central (Rendering: QuadReal)

Also, one of the trends is mixed-use for shopping malls by adding multi-residential homes. And that will increase the asset value of those properties. The malls of the future could also have senior housing on their properties.

There will be more fitness centres as well as more drive-thru food and coffee establishments. 

“About a year ago people weren’t talking about the metaverse and it was something that really wasn’t addressed and never really thought of. I can tell you that in the last six months everybody seems to be talking about it,” said Crombie. “In the metaverse world there’s people actually buying virtual real estate. There’s a lot of people in the gaming world and living virtual worlds in the metaverse and 2.7 billion playing it. This plays into the omnichannel. The metaverse is really just another extension of the omnichannel.

“It is hitting everybody’s radar screens.”

Crombie said experiential retail is very, very important.

Forever 21 Metaverse Shop City (Image: Forever 21)

“This is where back to being lifestyle architects as owners of retail properties we need draws to bring in (foot traffic) and there’s things you just can’t do online,” he said. “Experiential retail is the way to do it. It is definitely not going away and it’s nice to see.” He cited the Friends immersive exhibit at the Yorkdale Shopping Centre as an example of that.

Crombie also said short-term spaces will also be a trend. There were a record number of retail closures in 2020. That created vacant retail space, particularly in secondary and tertiary malls. Direct to consumer brands have been filling up the space as well as independents.

And Crombie said there’s a growing trend in high-end second-hand goods being sold through consignment.

“We see a huge growth area in that over the next couple of years,” he said. “There are issues that a lot of malls don’t allow second-hand products coming in there but I think retailers have got to realize that there’s an advantage to having some of these in there and the landlords are going to see some real growth in that,” he said.

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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