New data shows Canadians’ love for real world entertainment and shopping is likely to continue to boost retail property investors’ profits.
The recent Black Friday week holiday sales extravaganza in the US certainly showed that the retail world is still alive and well. However, as anticipated online and mobile sales took over an increasing large percentage of retail sales during this key period.
Online sales are believed to have exceeded $3B for the first time. Large chains like Walmart report that as much as 70% of their online sales were via mobile devices. Real estate analysts and Google both report similar mobile shopping trends in America. Even the news camera crews out at the malls found that some shoppers were simply out for the entertainment, and planned to take advantage of the sales via their phones later.
Interestingly, Google reports that shoppers spent between 35 minutes to 1.5 hours in physical electronics stores on November 25th. New Canadian retail data suggests our shoppers might spend even more time at local malls and shopping plazas this season. Statistics Canada reports that 98% of retail spending in the first 9 months of 2016 was spent in-store. That’s $389B so far.
Canada is widely recognized and prized as having among the highest sales per foot figures in the world. That’s not changing, especially as retailers get smart about engaging and interactive experiences and clicks to bricks. We see this at entertainment venues too, and those which are blending both. For example; the Edmonton Journal reports that Rogers Place has already exceeded expectations with 500,000 visitors since it opened just around 60 days ago.
For real estate investors this makes retail property in Canada very appealing. Although trends may be on the decline in foreign markets abroad, Canada’s online sales for brick and mortar retail tenants remains strong. When coupled with strong lease agreements, these online sales numbers will only contribute to higher yields and value among local retail properties as well. This could mean great potential for retail investments ahead, even without smart value-add plays.
Retailers are becoming savvier about technology and ecommerce. Yet, in Canada consumers still overwhelmingly prefer to get out and experience things for themselves. In fact; the more virtual we become, the more need and desire there may be to get out and enjoy ourselves in the real world. This is great news for retail investors, and a factor which should be accounted for when evaluating investment opportunities.