Several evolving trends could further boost the performance of Canadian retail property over the year ahead.
Canadian retail is one of the strongest and most desirable assets on the planet. Investors could see even better things ahead as these trends evolve and bolster the performance of retailers and shopping centers across Canada.
- Economic Growth
Statistics Canada reports that the national economy grew at a sustainable and highly envied 2.6% in the final quarter of last year. That beat analysts’ expectations, and could easily be outpaced in 2017, as Canada’s banking sector has performed very well thus far in 2017. Although not the most significant performance gain compared to its peers, TD Bank has announced 14% year-over-year growth in earnings and plans to increase dividends and share buybacks. It credits much of this success to retail banking in both the US and Canada.
- Cracking Down on E-Commerce Imports
After a recent test, Canada has determined it is losing over $1B each year in taxes and import duties on items being shipped in by foreign online retailers. This loss revenue potential has gained the attention of many legislators and depending on how new initiatives to crack down on e-commerce imports are executed, it could force more top online retailers to establish and expand their physical footprint in Canada, or simply make it more attractive for Canadians to shop locally.
- Smart Store Experiences
Adobe reveals a variety of new high tech efforts that physical retailers are making to augment and digitize the in-store shopping experience by adding innovative technology and greater customer experiences.
Some of the latest trends in this space are smart windows and mirrors which allow shoppers to virtually try on clothes, and receive automated suggestions. Mobile payments and chat bots help to customize the shopping experience, while virtual reality glasses enables shoppers to visualize what new purchases will look like in their homes.
- Building Density
Great effort is being made to increase building density in Canada. This is seen in new projects like Mirvish Village and the replacement of the old Honest Ed’s site, as well as building codes for infill properties in Edmonton. That all increases the amount of traffic per square foot of retail space. In turn this makes stores more profitable, and increases demand and potential rates on leasable retail space.
Retail property space and investments in Canada are already highly sought after and envied. These four emerging trends could compound the performance of these properties, and their appeal to savvy investors. The challenge right now is finding the available opportunities before prices rise, and while there is additional room for value-add opportunities and equity growth.