Vancouver Retail Market Slows as Demand for Space Remains Strong: JLL Report 

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Rising rents and a downtown recovery are fueling Vancouver’s retail market, says commercial real estate firm JLL.

“The Vancouver retail market is seeing increased demand even with economic uncertainty. Limited availability and rising rents are driving retailers to secure leases quickly,” said the company’s Vancouver Retail Insight, Spring 2024, report.

“Although retail sales have decelerated, some growth is expected in 2024, supported by a growing local tech sector and resilient consumer spending.

“Ridership, the opening of new concepts at Amazon’s The Post, and the rapid recovery of tourism continue to support the recovery of downtown Vancouver.”

“The Post” in Downtown Vancouver after Loblaw’s City Market opening. Photo: Lee Rivett.

JLL said the Vancouver retail leasing market has been thriving, with significant rental growth over the past five years. Demand for retail space has outpaced supply, as evidenced by increased net absorption in 2023.

“However, leasing volumes have gradually declined since their peak in 2022 as retailers face a softer outlook for consumer spending and a scarcity of premium spaces,” said the report.

“Vancouver remains an important hub for Canadian-based and international businesses. Retailers in the athletic, outdoor, and fashion sectors – including Adidas, JD Sports, Kit & Ace, and Esprit – have made expansion announcements.

“Sustained demand has driven rental growth, but more recently inflation and rising property taxes have also been contributing factors, as landlords pass these additional costs on to tenants.

“Construction activity has focused on the redevelopment of malls. The 1.2 million square foot Oakridge Park is scheduled for completion in spring 2025 and will feature a luxury component and the second Time Out Market in Canada.”

Oakridge Park in Vancouver. Photo: Lee Rivett.
Nine acre park at Oakridge Park. Image via QuadReal

While most space absorption has concentrated in general retail and neighbourhood centres, mixed-use retail spaces should see a significant increase in absorption, said JLL, adding that Vancouver’s retail market is performing well, marked by limited availability and surging rents. Sustained demand is prompting retailers to secure leases quickly, and limited new construction activity is expected to keep the market tight.

“Despite the deceleration of retail sales growth and a softer housing sector, Vancouver’s retail market remains in demand due to its fast-recovering downtown area and a flourishing local tech sector. The opening announcements of The Post in the downtown area and Oakridge Park in the suburbs are expected to sustain the market’s momentum,” explained the report.

“Looking ahead, the long-term prospects for Vancouver’s retail real estate market remain strong. The city’s high number of immigrants and its role as a hub for international retail concepts contribute to the positive outlook. 

“Retail sales in Vancouver have shown a downward trend in recent years, although some real growth is predicted for 2024. While home improvement, home furnishings, and jewelry are out of favour, an appetite for electronics, shoes, and clothing has emerged.”

Balenciaga on Alberni Street in downtown Vancouver. Photo: Lee Rivett.
Lao Feng Xiang on Alberni Street in downtown Vancouver. Photo: Lee Rivett.

The report said a weaker housing market has softened the economic outlook for Vancouver, but prospects for consumer spending remain positive. The city benefits from an influx of immigrants, a recent boom in the local technology sector, and positive prospects for employment growth.

Full-service and limited-service restaurants have outperformed retail goods and are expected to continue growing, but at a decelerated rate in the single digits. This suggests that dining experiences remain relatively strong despite an overall retail-sales deceleration, it added.

“The Post, Amazon’s office building in downtown Vancouver, is moving forward with the opening of its first concepts. Loblaws City Market, Fogo de Chão, and Evolve Strength fitness gym are just a few recent additions. Furthermore, The Post will feature a curated food hall, enhancing the overall downtown experience,” said the report. 

“Tourism in Vancouver is seeing a rapid recovery, with visitor numbers approaching pre-pandemic levels. While Canadian visitors have returned, international visitors − particularly from China, Japan, and South Korea − are still lagging. Destination Vancouver recently reported that demand for hotel rooms is projected to surpass supply by 2026, which could result in potential revenue loss for the industry.

“Rising hotel demand, coupled with restrictive Airbnb rules, has sparked a hotel boom, with three new large hotels planned for the downtown core.”

Fairmont Hotel Vancouver at Alberni Street and Burrard Street in downtown Vancouver. Photo: Lee Rivett.
Dior and Gucci within Fairmont Hotel Vancouver. Photo: Lee Rivett.

Brodie Henrichsen, Executive Vice President at JLL, said Vancouver’s retail market is fairly robust right now.

Brodie Henrichsen

“We’re seeing supply getting gobbled up. We’re not seeing a lot of new supply. And we’re seeing a pretty good movement of new tenants coming into the market and some reshuffling,” he said.

“You’re seeing a number of new flagship tenants opening up on Robson Street and I think you’ll see some more with the releasing of the Nordstrom. And I think you’re going to see some more movement up and down Robson Street over the next couple of years just with some reshuffling.”

He said there is some slight upward pressure on rental rates in the market.

“Our downtown core has recovered quite well. Tourism is back. The office market for the most part is quite busy downtown. We’ve got a lot of good fundamentals for the downtown market and the urban markets are doing quite well,” added Henrichsen.

Robson Street looking down Granville Street in downtown Vancouver. Photo: Lee Rivett.
Paradox Hotel on West Georgia with Stefano Ricci and Snowflake in downtown Vancouver. Photo: Lee Rivett.

“Retail sales are still holding pretty strong and in some cases we’re seeing some increases. The downtown market has been through its challenging times and it’s improving. I think we’re definitely seeing just more demand from tenants coming to the market and wanting proper flagship big presence opportunities in downtown Vancouver.”

While the tourism sector is growing, he said the biggest challenge is hotel rooms and finding places for tourists to stay.

“You’re seeing very strong demand. Hotel rates in Vancouver are sky high right now. It’s very expensive and occupancy levels are very high for the hotels and that’s without the Chinese tourists coming back. The last time I checked we’re at 15 or 20 per cent of the daily flights from China that we had back in 2018,” added Henrichsen.

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.

1 COMMENT

  1. With all due respect, was there a minimum word requirement for this article? It is heavily redundant and really didn’t tell us anything, but repeated that same nothing several times. I love getting Vancouver focused updates, but I’d like something more substantive.

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