Power Retail Vacancy in Canada: 2012
By Dr. Tony Hernandez and Tansel Erguden
Power centres are a mature shopping centre type in Canada. As the number and size of power centres has increased so to have the questions with regard to their vitality and viability. Can the waves of power retail development continue? Are we approaching saturation? Is Canada destined for the ‘greyfield’ phenomenon that has blighted parts of the US retail landscape? This research letter turns its attention to vacancy rates and how they have changed at power centres across the country. The updated analysis provides data on vacancy in terms of size of stores and length of vacancy over time. It highlights an overall increase in vacancy rates between 2008 to 2012 rising during the recession in 2009 followed by a small decline in 2010 and an increase through 2012. Despite the overall increase in vacancy rates over the last five years there continues to be limited vacancy of larger big box retailers (especially when compared to anecdotal evidence from the US), with vacancies instead increasing amongst the smaller ancillary retail stores. Demand for big box space appears to have stayed relatively strong over recent years. However, given the slowing rate of big box growth and the challenge of big box downsizing and the associated impacts of e-commerce on demand for bricks-and-mortar stores - the ‘ghost’ box phenomenon remains a potential threat on the distant horizon in Canada.