It will be back to the future for some retailers if the soaring cost and limited availability of land in some of Winnipeg's most popular retail hubs force developers to start building upwards instead of outwards.
The concept of multi-level, or vertical, retail development has been around for decades in larger, higher-cost Canadian cities like Vancouver and Toronto, according to Michael Stronger, a retail-leasing specialist with Shindico Realty Inc.
And while the concept hasn't gained a lot of traction yet in Winnipeg, Stronger thinks that could soon change.
"The prime retail areas are becoming more and more difficult to get into," he explained. "All the good land has been bought and developed."
On top of that, "land prices have gone up dramatically in Winnipeg," he said, particularly in those sought-after areas. So larger retailers wanting to open stores there will either have to go with a smaller store or one that has a smaller footprint but multiple levels.
One case where the vertical-development concept is already being applied is the new Target store under construction on the former Canad Inns Stadium site at Polo Park. To save on land costs, Target is building a complex that features a parkade on the ground level and retail store above it, rather than a traditional one-storey, ground-level store with a sprawling surface parking lot next to it.
"It increases the cost of construction but uses less land," Stronger said. "So you lower your land costs."
The Target store is part of the Plaza at Polo Park mixed-use development Shindico and Cadillac Fairview plan to build on the former stadium site. And it could be one of several multi-storey buildings in the development, which is expected to include a mix of retail and multi-family residential space.
"It's still a work in progress, but I would suggest you could see more multi-level development there," Stronger said.
Winnipeg has other, earlier examples of multi-level retail development. There's the Hudson Bay Co.'s six-storey, downtown department store, which dates back to the 1920s. There's also the downtown Portage Place and Cityplace shopping centres, and the Polo Park Shopping Centre, which started out as a one-storey mall with a second level being added later.
But Stronger noted most of the new retail development that's taken place in Winnipeg since the Second World War has consisted of single-storey buildings built in the suburbs, where land used to be plentiful and relatively cheap. So there was no need to build costlier, multi-storey complexes.
Retailer preferences also played a role. Given a choice, most retailers would rather have their stores at ground level because they're easier to access. But Stronger disputed the notion shoppers also don't like multi-level malls.
"As long as they have an elevator or escalator system, I can't see that people would be averse at all. Polo Park is a good example where shoppers don't seem to have any problem going up to the second level."
He also noted a vertical retail development doesn't have to mean several floors of retail space. It could be parking space on one level and retail on another, like the Real Canadian Superstores outlet on Portage Avenue West. There wasn't room for a store plus a surface parking lot, so it built an underground parkade with the store above it.
Stronger said retailers used to argue it was too costly to build an underground parkade. But soaring land prices and rising rental rates are causing them to rethink.
"As rental rates go up, it becomes more feasible."
He also noted vertical, mixed-use developments that include a combination of retail and office or multi-family residential space are already springing up around the city.
A good example is the Polo North complex Shindico and Cadillac Fairview built on the former Winnipeg Arena site at Polo Park. It has underground parking, retail space on the main floor, with two floors of office space above. Adding underground parking enabled the developers to go with fewer surface parking spots and a larger building.
Winnipeg architect Raymond Wan, who has designed a number of retail developments, agreed vertical, mixed-use developments are becoming more commonplace in Winnipeg. He said the concept works well because the residential and/or office tenants support the retail tenants and vice-versa.
"One feeds off the other."
The multi-level, mixed-use concept also works particularly well in the downtown, he said, where land costs are higher and retailers need more permanent residents to support their businesses.
"Retail cannot survive on just nine-to-five (customers)."
While Wan likes the idea of more vertical retail development, he thinks it will be a while before we see a lot of that in Winnipeg.
He said if Winnipeg enjoys another round of retail expansion such as the one it experienced over the last 10 to 15 years, "then I could see it (more vertical retail development) happening."
"But I think retail is getting saturated," he added. "There are a lot of them now, and land is still affordable because of all the new suburbs that are springing up. So I think it will take at least another decade (before a significant amount of new vertical retail development takes place)."
Know of any newsworthy or interesting trends or developments in the local office, retail, or industrial real estate sectors? Let real estate reporter Murray McNeill know at the email address below, or at 204-697-7254.