The overall retail vacancy rate in Calgary increased from 5.5 per cent a year ago to 6.5 per cent at the end of the first half of 2020, according to a new report by commercial real estate firm CBRE.
“The prospect pool of new emerging businesses to backfill the vacancy remains shallow as many existing tenancies try to preserve their cash and rationalize stores rather than expand,” said the report.
It said 430,633 square feet of retail product was completed in the first half of the year, leaving more than 2.7 million square feet in the construction pipeline.
“The retail market in Calgary entered the year on a relatively strong note; the economy was showing real signs of recovery from the 2014/2015 recession as residential growth rates, migration numbers and consumer confidence were all steadily improving,” said CBRE.
“However, the first half of 2020 will be remembered due to the unprecedented impacts of the global COVID-19 pandemic and the oil price collapse on March 9th, a ‘double whammy’ for Canada’s energy industry headquarter city, which hit consumer confidence in Calgary hard.”
The report said trends to watch in the retail sector include accelerated e-commerce growth with an emphasis on store pickup and the use of in-store automation to cut labour costs with increased convenience and limited contact.
“There is high demand on real estate offering drive-thru locations as well as stores with front entrances facing parking pools and growth in discount and off-price retail,” said CBRE.
“Small spaces are in demand as another wave of entrepreneurs look to start businesses, making covenant and business plan reviews more important than ever. The strong growth categories leading into 2020 included fitness, medical/pharmacy and restaurant, which slowed but are re-emerging as the economy reopens. It is is evident that we are at the beginning of a new era of retail in Calgary, those most willing to adapt and be flexible will emerge as winners in the long run.”