The race to bring U.S.-style outlet mall shopping to Canada is heating up with the announcement of a second such development planned for the area of Halton Hills, just outside Toronto.
Calloway REIT announced Monday it signed a letter of intent with Simon Property Group Inc. to develop a Premium Outlet Centre — a brand found in many U.S. locations that features luxury retailers like Coach, Kenneth Cole and Off 5th Saks, a bargain-priced spinoff of Saks 5th Avenue — at its site at Hwy. 401 and Trafalagar Rd.
Al Mawani, president and CEO of Calloway, said he hopes it will become a destination shopping phenomenon, much like similar outlet centres in the United States, drawing customers who plan on visiting for hours or even the whole day to peruse high-end fashion, shoes and accessories at discount prices.
And back in March, RioCan REIT announced plans to develop a Tanger Factory Outlet Centre — another U.S. outlet shopping centre chain with high-end retailers— also in Halton Hills, just a couple of country blocks west of Calloway’s site.
However, neither group has announced leases with any of the premium U.S. retailers that tend to draw Canadian shoppers to the south-of-the-border destinations.
Al Mawani, president and CEO of Calloway, said it was up to the company’s partner, Simon Property Group, to assist with the leasing.
“A number of the retailers will be from the United States and so, as we speak, that level of interest is now being gauged and discussions [are going on] around it,” he said.
When the Vaughan Mills shopping mall first opened north of Toronto in 2004, Bass Pro Shops Outdoor World was the only U.S. retailer to make its exclusive launch there. Other U.S.-based tenants, including Bed, Bath and Beyond, Off 5th Saks and Burlington Coat Factory were also expected, but never came.
Retailing consultant Wendy Evans of Evans & Co. notes that both U.S. companies working on the Halton Hills projects have great stables of retailers.
“You don’t always attract all the retailers that you work with in the States. But the idea is that you want a good cross section of retailers and you want some strong anchors that will be new to the market,” she said, adding, “The Canadian consumer loves new faces.”
Danielle Quilty, for one, is excited at the prospect of new shopping opportunities in her area. The sales representative at a real estate brokerage in the Halton Hills community of Georgetown said while she used to make cross-border trips to shop, she is far less likely to do so now due to time constraints and cost.
“I think bringing it close to home — especially with our dollar and the cost of gas — why not have it 10 minutes from my house?” she said.
The Calloway development is set to begin construction in spring 2012 — once the necessary approvals and permits are completed — and open sometime in 2013, said Mr. Mawani. And RioCan plans to open the first phase of a Tanger outlet centre by 2013.
U.S. retailers increasingly view Canada as an attractive market because of the strong loonie, higher sales per square foot and possible room for expansion. A recent report from commercial real estate brokerage Colliers International, found that Canadian sales average $580 per square foot compared to $309 per square foot in the U.S.
Canada also has a lower number of square feet of shopping-floor area per capita, just 14, compared to the U.S., which has 23.
The Colliers report suggested key markets for new U.S. retailers include clothing, accessories, jewellery and home furnishing.
Total retail spending in Canada increased 5% from 2009 to 2010, according to the report, and retail spending per capita for Canada and the U.S. are now equal.
Indicators like those found in the Colliers report may explain Target’s recently announced plans for the country and rumoured or confirmed expansion into Canada by U.S. brands like Express, J.C. Penney, Marshall’s, Nordstrom, J. Crew, Kohl’s and Dick’s Sporting Goods.
However, an April 2011 survey from the Boston Consulting Group recently found while Canadians are still optimistic about the economy in general, 90% of consumers plan to spend the same or less this year compared to last. The survey found Canadians, who did not modify their spending as dramatically as Americans during the economic downturn, are now being forced to cut back out of necessity as debt stretches households’ finances further and further.
But outlet shopping may be just what Canadian consumers are looking for. The survey found 75% of respondents reported spending more time shopping around for better prices and 86% reported buying “on deal” over the past 12 months.
In more retailing news, a third Canadian real estate investment trust, Primaris Retail REIT, announced plans Tuesday to purchase five mall properties from property management company Ivanhoe Cambridge, which owns Vaughan Mills. In the $572-million deal, expected to close on June 22, 2011, Ivanhoe will sell Primaris a 100% interest in Oakville Place, Burlington Mall, Tecumseh Mall, St Albert Centre and Place Vertu.
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