The Canadian retail sector in 2024 is a page out of a Charles Dickens novel where we had the best of times with robust consumer real estate construction and leasing activity with new retail brands expanding in the Canadian market along with sales surges in the luxury and value sectors, says Michael Kehoe, Broker/Owner of Fairfield Commercial Real Estate in Calgary.
“Certainly the best of times in Alberta continue with significant population growth driving new household formation and retail and restaurant sales,” he said.
“Charles Dickens would agree that it’s also the worst of times for some retailers as it was a mild fall and winter in some parts of the country and for many this resulted in underwhelming and lacklustre sales performance. Retail sales were up in some sectors but disappointing in others.”
Kehoe said many retailers are challenged with controlling their overhead, particularly the cost of wages and salaries, escalating rents and occupancy costs. Other challenges continue like interest rates, supply chain issues, the payback of pandemic era government loans, slimmer tenant improvement incentives and now rising theft and shrinkage. There is definitely a flight to quality locations across the retail spectrum.
“The major challenge in 2024 will be catching the consumer’s attention amid the noise of doom and gloom in the media with recessionary talk and geo-political events that include two wars. Consumer confidence is critical,” he said.
“The concept of organized retail over the past 900 years has evolved into what we now refer to as shopping centres and here we are in 2024 and it’s a landlord’s market. No surprise there. Over my 47 years in the industry, I can say that the pace of change at this time is unprecedented. The ability of today’s sophisticated shopping centre owners to quickly cycle space to new and fresh retail and food service concepts is impressive. This ensures that shopping centres remain relevant to the shopper with fresh offerings and experiences are available for consumers who have many shopping and dining options.”
Kehoe said he is expecting 2024 will be a year of robust leasing activity, constant churn stores and restaurants coming and going.
“On the human capital side of the business as a consumer real estate broker, I see many of my industry colleagues that have jumped ship, changed firms, walked the plank or just faded away. In retail brokerage there was a significant shuffling of the deck as brokers and sometimes entire teams changed firms or created new ventures. The large brokerage firms absorb smaller firms and compete for market share. Many of the big national brokerage firms know that it takes more than a big brand acronym and a fancy website to retain talent and stay competitive,” he said.
“One final point to make; watch for the emergence of “Net Zero Retail” in shopping centre construction and retail store and restaurant build outs. This is sure to drive up costs.
“The retail and food service business is a Darwinian struggle at the best of times. It’s no longer a matter of survival of the fittest. It’s survival of the innovative, the quick to adapt to change and new trends. As shopping centre landlords focus on tenant financial covenants, 2024 is the year of the survival of the financially stable.”
In this video interview, Michael Kehoe, Broker/Owner of Fairfield Commercial Real Estate in Calgary, discusses how 2024 is shaping up in the world of retail real estate, the challenges facing Canadian retailers and the food and beverage industry, where do we go from here and the trends to watch for this year, why it’s a landlords’ market today, and why it is still appealing for entrepreneurs to start up new businesses despite the challenges.
Connect with Mario Toneguzzi, a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and the only Canadian – to learn how you can tell your story, share your message and amplify it to a wide audience. He is Senior News Editor with Retail Insider and owner of Mario Toneguzzi Communications Inc. and can be reached at mdtoneguzzi@gmail.com.
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