Vancouver is poised for outstanding growth over the next five years which is good news for retailers already there and those who want to join the burgeoning market.
The latest Vancouver Urban Retail Report, by real estate firm JLL, said the growth will be driven by impressive gains in population, GDP, and employment rate − all of which exceed the national average.
“As the largest market in Western Canada and third largest in the country, Vancouver boasts a favourable mix of economic sectors that skew toward higher-paying jobs. The region’s vibrant lifestyle and weather act as a magnet, attracting young workers and fostering an influx of more than 50,000 new immigrants each year,” said the report.
“Vancouver’s continued population growth is expected to fuel increased spending and business investment, particularly in the burgeoning technology sector. Technology companies have established offices in the region to tap into the pool of engineering talent, reduce labour costs, and avoid the challenges associated with U.S. immigration.
“The redevelopment of the downtown The Post, home to Amazon, is emblematic of the region’s progress in the tech sector. In 2019, Amazon − looking to secure world- class engineering talent − shifted its focus from a failed second headquarters in New York City to expanding its Vancouver hub.”
Also good news for the retail sector is the return of the tourism industry to the region.
Vancouver International Airport (YVR), Canada’s second-busiest airport, anticipates a strong 23-24 winter season with passenger traffic expected to exceed 2019 levels. This positive outlook is due to the boom in B.C.’s ski resorts and YVR’s significant efforts to regain traffic lost during the pandemic by restoring service, attracting new carriers, and expanding its list of destinations, said JLL.
“Air-passenger traffic in 2023 is estimated to have reached approximately 90 per cent of 2019 levels, with much of the remaining gap due to a decline in Asia- Pacific travelers. While domestic passenger traffic has fully recovered, the return of Asia Pacific travelers has been slower due to limited flights from mainland China following its recent lockdown,” added the report.
“In turn, the Vancouver Fraser Port Authority (VFPA) is forecasting another record cruise season in 2024, with ship visits expected to match the 2023 record. In 2023, 332 cruise ships docked between April and October, accommodating a remarkable 1.25 million passengers − an increase of 54 per cent over the previous year.
“Looking ahead, Vancouver’s tourism momentum is expected to continue, as the city has been selected by FIFA to host the 2026 World Cup. Over the next three years, Vancouver will also host the Invictus Games and the Grey Cup. These prestigious events will undoubtedly boost tourism and solidify Vancouver’s position as a global destination.”
Trevor Thomas, Senior Vice President of JLL, described the Vancouver retail market as “healthy” right now.
“We’ve got a strong labour market. There’s ever-growing population. More and more people are coming back to work. And together this drives retail sales,” he said. “There’s been a lot of transition happening downtown on Robson Street. While we can’t talk about all the deals right now, it’s going to look very different in the next 12 months.
“The deals we can talk about is we’ve heard adidas is going to be back filling Victoria’s Secret with a big flagship location. And there’s a few other deals that are in negotiations right now that are getting close to being finalized. Esprit is hoarded up and they’re getting ready to open. Club Monaco closed and there’s another fashion retailer that has backfilled their spot.”
“So when there’s a vacancy the demand is always greater than expected. It doesn’t matter if it’s on a high street downtown or if it’s in a power centre in the suburbs, there’s always someone there knocking on the door.”
He said athleisure and outdoor recreational retail is “the flavour of the month right now . . . That’s certainly the category that’s popular.”
As the daytime population on those high streets returns to normal, people are spending more money in public areas like restaurants and movie theatres and recreational areas.
“That’s all up 20 per cent as well. So that speaks something to sort of where the mind set is right now for a lot of consumers. They’re feeling more comfortable in these public places and spending dollars,” added Thomas.
The JLL report said that Q4 2023 average asking rents across Vancouver’s five retail corridors stood at $130 per square foot per year. But it was $200 per square foot for the popular Robson Street.
“Robson Street is still centre ice and I think it will continue to be centre ice,” added Thomas.
At the end of the fourth quarter last year, the number of direct ground floor availabilities totaled 37, or 6.2 per cent of the storefronts in the corridors tracked by JLL.
“The retail property fundamentals for Robson Street show signs of a robust recovery from the pandemic. Premium asking rents are approaching pre-pandemic levels, indicating a positive trend, and a wider range of rental rates suggests a more diverse mix of retail offerings on the street,” explained the report.
“Nordstrom’s departure from CF Pacific Centre has created opportunities for its shop-in-shop stores to find locations on Robson Street. This recent increase in demand for space has contributed to a decrease in overall availability compared with the peak in 2020.”
Concessions and pop-up shops, once common, are now becoming scarce. This could be a sign of growing landlord confidence and a preference for longer-term leases. Retailers are signing 10-year leases, indicating a positive outlook for the market, said the report.
“The athleisure trend continues to grow in the area, pointing to the importance of fitness and casual wear in the local retail scene. Nearby, Alberni Street – a destination for high-end shoppers seeking luxury goods and designer fashions in the downtown core – continues to see increased demand for luxury brands, even with the suburban Oakridge Park and McArthurGlen Designer Outlet Vancouver,” it said.
Despite the challenges posed by the pandemic, West 4th Avenue has continued its upward trajectory to become one of Vancouver’s most sought-after high streets, said JLL.
“In particular, many clicks-to-bricks brands, along with the recent addition of accessories retailer Monos, have chosen West 4th as their first retail location in the market. With availability rates remaining low, landlords are no longer considering concessions that were once on the table. The desirability of the Kitsilano residential area has strengthened their position and allowed them to maintain favourable lease terms,” said the report.
“Exciting redevelopment plans are underway on West 4th Avenue, specifically between Vine and Balsam Streets at 2346 West 4th Ave. The project, scheduled for completion by 2025, will introduce four retail units and one restaurant unit, further enhancing the street’s appeal and providing new opportunities for retailers and restaurants.”
