samsonyuen
May 2nd, 2005, 04:27 PM
Canada’s developers favor a mixed-use format as the focus turns to city retail
BY SUSAN THORNE
Mixed-use centers are getting as much attention in Canada as they have lately in the United States.
Combining a shopping center with residential, office or other uses is not a new phenomenon north of the border, but it is one being seen more frequently as retailers and shopping center developers turn their attentions to opportunities in the cities.
Because urban real estate values are high, mixing uses can be an effective strategy for making a project profitable, real estate executives say.
“Certainly the industry is maturing in Canada; there are fewer traditional shopping center opportunities out there,” said Blake Hudema, an urban planner and shopping center consultant who is president of the Hudema Consulting Group, in Vancouver, British Columbia. “But downtown, the land cost and density of the surrounding land uses dictate that you have to be more innovative and creative in your approach to shopping centers.”
It’s not entirely a matter of land cost, Hudema notes. Mixed-use centers are more practical in downtown settings, where there isn’t the space for traditional shopping centers and their sprawling parking lots.
Density was a primary consideration for Grosvenor Canada in the case of The Rise, a retail and residential project that the Vancouver-based developer is undertaking on a sloping, full-block site on Vancouver’s Cambie Street.
“This is an urban site and we’ve paid urban land prices,” explained Ryan P. Beechinor, a vice president at Grosvenor. “We have to utilize the full density or we will not be competitive.”
Given the adjacent neighborhood’s proliferation of large-scale retail, Grosvenor decided on a cluster of big-box stores to give its center critical mass as a shopping destination. Those five anchors, totaling 180,000 square feet of retail, will include a Save-On Foods supermarket, a Winners and a Home Sense store. There will also be 40,000 square feet of small retail at street level and 500 underground parking spaces.
Grosvenor started out with a purely retail development concept, but the city’s planning department encouraged the company to add a residential component, in keeping with Vancouver’s goal of expanding the downtown population. Plans now call for 82,000 square feet of town houses on top of the retail premises.
This 92-unit residential component takes advantage of Vancouver’s “reverse migration” trend in favor of downtown living, Beechinor points out, and its residents will provide a built-in market for the retail.
And it isn’t just new projects that are combining uses. Toronto-based Cadillac Fairview plans an extension to the Eaton Centre in downtown Toronto that will stack three levels of parking and a three-story building housing Ryerson University’s business school above 130,000 square feet of large-format retail.
“This part of the [Eaton Centre] complex will allow larger-format retailers to be part of the mall, thus enhancing our retail mix,” said John Sullivan, senior vice president of development at Cadillac Fairview. Rents for the new stores, located at street level and below, will range from C$30 ($24) to C$35 per square foot, Sullivan says. Future tenants (the opening date is September 2006) are expected to include an electronics outlet and a grocery store.
The Eaton Centre annex is the first of several mixed-use projects planned by Cadillac Fairview. Sullivan notes that there is a limited market at present for regional malls and office space, his company’s core investment vehicles. “As an adjunct to those activities, we’re looking at larger mixed-use projects in the major cities — Montréal, Calgary, Toronto and Vancouver — as a way to continue our growth,” he said. The first of these initiatives will be announced in late spring.
Introducing other uses helps revitalize malls in central locations, executives say. An example is Cadillac Fairview’s Don Mills Town Centre, a 49-year-old, 400,000-square-foot Toronto-area shopping center that is to be reconfigured as a hybrid “mall with a tail” with 1,500 apartment condominiums in adjacent buildings. The starting date for this renewal has not yet been set.
The benefits of mixed-use refurbishment can already be seen at North Hill Centre, in Calgary, a Sears-anchored enclosed center that was underperforming when it was acquired by Regina, Saskatchewan-based Harvard Developments in 1999. Harvard’s C$26 million reconfiguration of North Hill, completed in 2003, created an almost entirely new retail mix totaling about 485,000 square feet of gross leasable area (GLA), and turned the center around to face the Trans-Canada Highway running alongside it. Six big-box tenants were added on the mall pad, including Kinko’s, Mark’s Work Wearhouse and Petcetera.
Harvard also incorporated 32,000 square feet of office space in the complex, and leased air space to a local developer who constructed two eight-story towers housing 175 luxury condominium units; the second of these was completed in 2004.
Cameron J. Costley, CSM, Harvard’s general manager of North Hill Centre and suburban properties, attributes a significant share of the center’s revived customer traffic to the new residents. “With those towers, you’re bringing over 460 residents here multiple times per week,” he observed. The center is thriving, Costley says, ringing up sales of C$450 per square foot compared with C$314 prior to its redevelopment, and 96.7 percent of the retail space is leased.
Including residential and office in a project makes good sense, he maintains. “It makes you wonder why more developers haven’t done it.”
Retail developers are not the only ones providing impetus to the mixed-use trend. Central City in Surrey, British Columbia, a suburban municipality near Vancouver, is a landmark C$26 million project originally conceived by the provincial government as a community revitalization initiative. In 1999, Surrey-based private sector developer Central City acquired the former Surrey Place Mall, a 626,000-square-foot enclosed center anchored by Zellers and Sears, and created an 860,000-square-foot office structure next to the shopping center.
The new building, completed in 2003, is only 20 percent occupied at present, though a majority of its space was recently leased to Simon Fraser University and business and government tenants. The office presence has already produced dramatic results for the mall, now known as Central City, say executives.
“The center was underperforming and we’re turning that around,” said Paul Reilly, president of Central City. “You can see the new demand for retail space.” New tenancies will occupy 100,000 square feet of GLA this year, among them a supermarket, specialty retailers and a Best Buy store in a new freestanding box. Sales per square foot climbed 5.2 percent in 2004 compared with 2003, Reilly reports, and he anticipates a much greater increase once the remaining 80 percent of office space is filled.
In short, mixing uses, like drinks, can make for a potent brew.
BY SUSAN THORNE
Mixed-use centers are getting as much attention in Canada as they have lately in the United States.
Combining a shopping center with residential, office or other uses is not a new phenomenon north of the border, but it is one being seen more frequently as retailers and shopping center developers turn their attentions to opportunities in the cities.
Because urban real estate values are high, mixing uses can be an effective strategy for making a project profitable, real estate executives say.
“Certainly the industry is maturing in Canada; there are fewer traditional shopping center opportunities out there,” said Blake Hudema, an urban planner and shopping center consultant who is president of the Hudema Consulting Group, in Vancouver, British Columbia. “But downtown, the land cost and density of the surrounding land uses dictate that you have to be more innovative and creative in your approach to shopping centers.”
It’s not entirely a matter of land cost, Hudema notes. Mixed-use centers are more practical in downtown settings, where there isn’t the space for traditional shopping centers and their sprawling parking lots.
Density was a primary consideration for Grosvenor Canada in the case of The Rise, a retail and residential project that the Vancouver-based developer is undertaking on a sloping, full-block site on Vancouver’s Cambie Street.
“This is an urban site and we’ve paid urban land prices,” explained Ryan P. Beechinor, a vice president at Grosvenor. “We have to utilize the full density or we will not be competitive.”
Given the adjacent neighborhood’s proliferation of large-scale retail, Grosvenor decided on a cluster of big-box stores to give its center critical mass as a shopping destination. Those five anchors, totaling 180,000 square feet of retail, will include a Save-On Foods supermarket, a Winners and a Home Sense store. There will also be 40,000 square feet of small retail at street level and 500 underground parking spaces.
Grosvenor started out with a purely retail development concept, but the city’s planning department encouraged the company to add a residential component, in keeping with Vancouver’s goal of expanding the downtown population. Plans now call for 82,000 square feet of town houses on top of the retail premises.
This 92-unit residential component takes advantage of Vancouver’s “reverse migration” trend in favor of downtown living, Beechinor points out, and its residents will provide a built-in market for the retail.
And it isn’t just new projects that are combining uses. Toronto-based Cadillac Fairview plans an extension to the Eaton Centre in downtown Toronto that will stack three levels of parking and a three-story building housing Ryerson University’s business school above 130,000 square feet of large-format retail.
“This part of the [Eaton Centre] complex will allow larger-format retailers to be part of the mall, thus enhancing our retail mix,” said John Sullivan, senior vice president of development at Cadillac Fairview. Rents for the new stores, located at street level and below, will range from C$30 ($24) to C$35 per square foot, Sullivan says. Future tenants (the opening date is September 2006) are expected to include an electronics outlet and a grocery store.
The Eaton Centre annex is the first of several mixed-use projects planned by Cadillac Fairview. Sullivan notes that there is a limited market at present for regional malls and office space, his company’s core investment vehicles. “As an adjunct to those activities, we’re looking at larger mixed-use projects in the major cities — Montréal, Calgary, Toronto and Vancouver — as a way to continue our growth,” he said. The first of these initiatives will be announced in late spring.
Introducing other uses helps revitalize malls in central locations, executives say. An example is Cadillac Fairview’s Don Mills Town Centre, a 49-year-old, 400,000-square-foot Toronto-area shopping center that is to be reconfigured as a hybrid “mall with a tail” with 1,500 apartment condominiums in adjacent buildings. The starting date for this renewal has not yet been set.
The benefits of mixed-use refurbishment can already be seen at North Hill Centre, in Calgary, a Sears-anchored enclosed center that was underperforming when it was acquired by Regina, Saskatchewan-based Harvard Developments in 1999. Harvard’s C$26 million reconfiguration of North Hill, completed in 2003, created an almost entirely new retail mix totaling about 485,000 square feet of gross leasable area (GLA), and turned the center around to face the Trans-Canada Highway running alongside it. Six big-box tenants were added on the mall pad, including Kinko’s, Mark’s Work Wearhouse and Petcetera.
Harvard also incorporated 32,000 square feet of office space in the complex, and leased air space to a local developer who constructed two eight-story towers housing 175 luxury condominium units; the second of these was completed in 2004.
Cameron J. Costley, CSM, Harvard’s general manager of North Hill Centre and suburban properties, attributes a significant share of the center’s revived customer traffic to the new residents. “With those towers, you’re bringing over 460 residents here multiple times per week,” he observed. The center is thriving, Costley says, ringing up sales of C$450 per square foot compared with C$314 prior to its redevelopment, and 96.7 percent of the retail space is leased.
Including residential and office in a project makes good sense, he maintains. “It makes you wonder why more developers haven’t done it.”
Retail developers are not the only ones providing impetus to the mixed-use trend. Central City in Surrey, British Columbia, a suburban municipality near Vancouver, is a landmark C$26 million project originally conceived by the provincial government as a community revitalization initiative. In 1999, Surrey-based private sector developer Central City acquired the former Surrey Place Mall, a 626,000-square-foot enclosed center anchored by Zellers and Sears, and created an 860,000-square-foot office structure next to the shopping center.
The new building, completed in 2003, is only 20 percent occupied at present, though a majority of its space was recently leased to Simon Fraser University and business and government tenants. The office presence has already produced dramatic results for the mall, now known as Central City, say executives.
“The center was underperforming and we’re turning that around,” said Paul Reilly, president of Central City. “You can see the new demand for retail space.” New tenancies will occupy 100,000 square feet of GLA this year, among them a supermarket, specialty retailers and a Best Buy store in a new freestanding box. Sales per square foot climbed 5.2 percent in 2004 compared with 2003, Reilly reports, and he anticipates a much greater increase once the remaining 80 percent of office space is filled.
In short, mixing uses, like drinks, can make for a potent brew.