It’s a shopping shakeup

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This article was published 13/03/2017 (3309 days ago), so information in it may no longer be current.

The pending opening of the province’s first factory outlet mall will reshape the local retail landscape, and mostly for the better, according to one commercial real estate firm.

In its recently released 2017 Real Estate Market Outlook report, CBRE cited the May 3 opening of the 400,000-square-foot Outlet Collection Winnipeg mall at the corner of Kenaston Boulevard and Sterling Lyon Parkway as one of several major new developments that will have a big effect on the city.

Two other it mentioned were the $400-million True North Square mixed-use development under construction on Graham Avenue, the 45-storey Skycity Centre office/retail/condominium tower — which is also planned for Graham Avenue — and the 40-storey apartment tower to be built on top of the Winnipeg Square underground retail/parking mall at Portage Avenue and Main Street.

Ryan Behie, executive vice-president and managing director of CBRE’s Winnipeg office, agreed the outlet mall, which will have more than 100 stores, will take some business away from other shopping malls and retailers in the city. But he maintains it will also bring new shoppers and retail spending to the city.

He noted there are Winnipeggers who are purchasing products from online factory outlets or outlet malls in the United States and other parts of Canada.

Once the new Winnipeg mall opens, they’ll have the option of doing their buying here because the new mall will have many of the same stores found in other outlet malls.

“So you might see some of those dollars repatriated back into the local economy.”

Behie said it will be the only outlet mall in our part of the country, so it should attract shoppers not only from all over Manitoba, but from Saskatchewan, northwestern Ontario and several nearby U.S. states.

That “is quite a large draw, so that will result in new retail spending coming into the market, as well,” he said.

Behie said the mall’s pending arrival has already had a positive impact on some existing shopping centres because some of the retailers who will have stores in the outlet mall have also opened first-run stores in regional malls to help pave the way for the opening of their factory outlet store.

“Not all retailers send old product from their first-run stores to their factory outlet, but in the cases in which that is the model, it obviously makes sense to have a first-run store in the same market as the outlet,” he explained. “So some of these retailers that didn’t have a location in the city five years ago have been jockeying for positions in some of our enclosed malls in order to get a first-run store here, and in position.”

Behie agreed there will be some fallout from the outlet mall’s arrival. For example, it may have caused the postponement of some other new retail developments in the city.

“It (the retail market) has to grow at a balanced pace, so some of the other proposed developments may be negatively impacted by the success of this development because they all can’t happen at once,” he noted.

Also, some existing developments may lose tenants to the Seasons development where the outlet mall is located because those tenants want to be close to the new mall. He said CBRE has several retail clients who are doing that, although he declined to reveal their names.

But he argued that when you add it all up, the positives still outweigh the negatives.

“Rest assured, there may be some small negative impact spread across the entirety of the market… but I don’t think there is going to be any significant impact on any one retailer, or any one shopping mall. It (the outlet mall) will succeed by serving to grow the market, rather than simply to steal market share.”

He said it’s a similar story with the True North Square (TNS) development in downtown Winnipeg. It’s also going to have an impact on the downtown office market.

He noted two longtime tenants from the Portage-and-Main area have already said they’ll be moving to TNS’s first office tower when it opens in the summer of 2018. And others are likely to follow, he added.

But he predicted the Portage-and-Main office towers will back fill that space with tenants from other areas of the downtown, such as Broadway, Graham and St. Mary Avenue.

“So there may be some turbulence over the next few years. But again, I don’t think the situation is dire. I think Portage and Main has always been, and will continue to be, a very important focal point of commerce in downtown Winnipeg,” he said. “And I don’t think True North Square will upset that. I think there is room in the downtown for both to be successful.”

Behie said the apartment tower Artis Real Estate Investment Trust (REIT) plans to build on a pad on top of Winnipeg Square — the official address is 300 Main St. — is significant because it will add a new residential component to the area.

He noted Artis also owns the office towers at 360 Main St. and 220 Portage Ave., as well as the Winnipeg Square retail/parking complex.

“Artis REIT is seeking to build a bit of a campus-like feel to Portage and Main. The only thing they don’t really have in the sort of mixed-used game is the residential component,” he said. “I think 300 Main is feasible, and there will be demand for that residential component. And it will complete Artis REIT’s live-work-play product offering at Portage and Main, so again, back to the resilience of Portage and Main.”

murray.mcneill@freepress.mb.ca