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Kelowna retail 2012 q3


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  • 1. Q3 2012 | RETAILCOLLIERS INTERNATIONAL | MARKET REPORTKELOWNA BRITISH COLUMBIA Canadian Market Overview Canadian economic performance remains in growth mode, albeit moderate in the East and strong in the West. The divide between East and West is attributable to commodities driving the west and the lack of a similar catalyst in the East. Manufacturing in the east is weighed down by slow growth in the U.S.; an upside surprise is the return of Auto sector to near pre-recession levels. The outlook for commercial real estate is stable, with the exception of a few higher growth centers in the west. Employment growth will sustain the office market and growth in retail sales, along with new U.S. retailers will underpin demand for retail and distribution facilities. Manageable new supply of both office and industrial property should avert supply driven vacancy challenges. Overall commercial property looks well positioned to close out a solid year in 2012 and continue on the same path through 2013. BC MARKET: Colliers has five offices in British Columbia: Vancouver and Surrey are both located in the Lower Mainland; Kelowna is located in the Okanagan Valley and Nanaimo and Victoria are on Vancouver Island. Statistics Canada-Unemployment Graph MARKET INDICATORS Q4 Q3 2011 2012 VACANCY   NET ABSORPTION   CONSTRUCTION   RENTAL RATE  
  • 2. MARKET REPORT | Q3 2012 | RETAIL | KELOWNA Central Okanagan Market OverviewUnder Construction Kelowna is the largest city in Southern and 2012 is forecast to grow between 2.0% B.C. with a population of 117,300 and a and 2.2%. Real GDP growth is expected toRetail - Q3 2011 total population of approximately 180,000 increase in 2013 to approximately 2.6%. Building Square Feet Sub-Area in the Central Okanagan. Diversification Lower remains the Central Okanagan’s greatest KELOWNA RETAIL SNAPSHOT SOPA 38,000 economic strength. Agriculture, finance, Mission manufacturing, professional services and 2010 Q4-2011 Brandt’s Creek North 45,700 technology are all important industries. Inventory* 6,072,00 6,096,000 Crossing Glenmore Vacant Space* 244,418 216,562 The top three occupations (sales & service Vacancy Rate 4.03% 3.55% / trades, transport, equipment operators / business & finance) in the Central Okanagan Net Absorption* 51,800 Retail Lease Rates - 2012 Under 24,000 44,700 account for 60% of total employment. Enclosed Regional Centres $50-$90 Construction* Downtown* $10-$30 Economic growth in the Central Okanagan Neighbourhood Centres $20-$30 had been strong up until 2008 when Q2-2012 economic conditions changed globally. Power Centres $30-$40 Inventory* 6,096,000 According to the 2010 B.C. Financial and Economic Review published by the Vacant Space* 260,000*depending on location; closer to foot ofBernard Avenue, rent increases provincial government, B.C.’s economic Vacancy Rate 4.27% growth in 2008 was modest at 0.2% but Net Absorption* (43,500) contracted in 2009 at -2.3%. The Ministry Under 95,000 of Finance and BC Economic Forecast Construction* Council indicated that 2010 saw a 3.3% *in square feet growth, but 2011 growth was closer to 2.2% SOPA Square Construction - 3000 Pandosy Street P. 2 | COLLIERS INTERNATIONAL
  • 3. MARKET REPORT | Q3 2012 | RETAIL | KELOWNAKelownaNEW RETAIL CONSTRUCTION Downtown retail lease rates seem to have quality space leasing in a timely manner; stabilized near 2006 rates with vacancies however, space that is even somewhatNew retail construction within the City continuing to lease up quickly. There was sub-par, continues to remain vacant. Forof Kelowna during 2012 includes: 45,700 only 1 noted vacancy on Bernard Avenue example, sites with excellent exposure, goodsquare foot, Brandt’s Creek Shopping Centre in the 100 to 600 block (The “Sails” to parking and access and high traffic countswhich will be anchored by a Cooper’s Food Safeway) and that was the space vacated will lease up quicker than a lower rent siteStore and Shoppers Drug Mart, scheduled (500 block) by Ten Fashions after relocating without the noted open spring 2013. The newly completed to Towne Centre Mall.Commerce Plaza near the intersection of ABSORPTIONHwy 33 and Hwy 97 is complete. Four Hwy 97 (from downtown to Hwy 33) has a(4) tenants occupy this development and wide range of lease rates starting at $11.00 The 6 month period of Q4 2011 to Q2 2012include: Great Canadian Oil Change; per square foot for 1,744 square feet at shows a negative absorption of (43,500)Bluetail Sushi & Bistro; Helmet’s Sausage Central Plaza up to the low $30’s at Central square feet. This is due in part to theKitchen and Rayacom Printing and Design. Park Power Centre for a similar size space. vacated retail space in Rutland at Plaza 33,There is still +/- 14,000 square feet available Restaurant pad sites at Central Park Power Keehn Centre, some service commercialwhich includes a restaurant / banquet hall Centre are paying the highest lease rates uses in the Banks Road area and the newspace. while other tenants +5,000 square feet fall project at 2620 Hwy 97. in the range of $27 to $37 per square foot.The “live / work / play” community of SOPA Kelowna’s overall retail vacancy rate of(SOuth Pandosy Area) is under construction In making a comparison of lease rates in 4.27% is healthy compared to other citieswith 38,000 square feet of ground floor neighborhood centres, such as Kelowna of similar size such as Victoria and Halifaxretail when complete. Scheduled for Crossing and Burtch Plaza, we have found who’s vacancy rates were at 10.1% (Victoria)completion Spring 2013. lease rates to be on par with 2006 / 2007 and 6.5% (Halifax) at the end of 2011. rates. There has been only slight increasesWest Kelowna continues to expand their in the $0.50 to $1.00 per square foot range RETAIL BUILDING SALESvast selection of retailers with the recent since that time.opening of Okanagan Lake Landing, just Only 1 retail building is reported to haveover the W.R. Bennett Bridge approximately In both the downtown core and some sold in Q1 / Q2 2012. 441 – 447 Bernard10 km before entering West Kelowna. instances along Hwy 97, tenants that leased Avenue sold in February 2012 at a CAP rateShoppers Drug Mart, DQ, TD Canada Trust, during the boom years (2007 / 2008) have of 5.30%. 274 Lawrence Avenue (LiquidRoyal Bank, Sammy J’s Bar & Grill and renewed in 2012 at same or lesser rates. Zoo) is currently for sale with an askingLandmark Theatres have opened or are Inducements such as free rent have been price of $1,090,000 for 6,922 square feet.opening summer 2013 offered to retain tenants in current locations Both buildings are in the downtown core. (both retail and office sectors).RETAIL ACTIVITY IN SUB AREAS 2011 Retail Building Sales CAP Rate Larger retail vacancies that have been 441-447 Bernard 5.30%Lower Mission / South Pandosy – this on the market for over 2 years includearea is a high income, trendy and upscale Penticton Plaza 6.75% the former A&B Sound building on Leonsuburb of Kelowna. The South Pandosy Avenue, the former Bargain, Bargain Store 1630 Pandosy 5.69%area has many boutique type shops, coffee on Bernard. United Furniture warehouse isshops with street side patios and caters to holding a “closing out” sale which will leave 2010 Retail Building Sales CAP Ratepedestrians and locals residing in the area. 38,000 square feet vacant on Hwy 97, near 531 Bernard 6.50%Vacancies are quick to lease up, especially the intersection of Hwy 97 and Hwy 33. InVue Strata 8.35%sizes in the range of 1,000 to 1,500 square Notable vacancies in 2012 include Keehn Main St. Penticton 6.00%feet while the former Blockbuster Video Centre, service commercial space in thespace at Mission Park Mall remains vacant Banks / Spedding Court area and the new(3,500 sq ft). The space vacated by Roger’s development at 2620 Hwy 97, Commerce 2009 Retail Building Sales CAP RateVideo has been leased to a private liquor Plaza. 654 Cook Road 8.00%store; lease holds are currently underway Kettle Valley Main St 7.30%and the space reportedly leased in the high OVERALL Winfield Shop Ctre 7.20%$20’s for 5 years. Overall, the retail market in Kelowna shows strong signs of continued stability with COLLIERS INTERNATIONAL | P. 3
  • 4. MARKET REPORT | Q3 2012 | RETAIL | KELOWNA Local Spotlight Story - Brandt’s Creek Crossing 480 offices in 61 countries on six continents United States: 135 Canada: 39 Latin America: 17 Asia Pacific: 194 EMEA: 95 • $1.6 billion in annual revenue • 672.9 million square feet under management • More than 10,000 professionals CONTACT INFORMATIONBrandt’s Creek Shopping Centre is located in the suburb of Glenmore which has been Perry Freemanunder-retailed for the past few years. Glenmore boasts vacancy rates of less than 1% to Managing Director, BC Interior2% with the immediate community being +25,000 people. TEL: 250 763 2300 perry.freeman@colliers.comBrandt’s Creek is currently under construction with staggered opening dates of December2012 through to January 2013. Upon completion, this new development will be 45,700 Wendy Dycksquare feet, situated on a 3.27 acre site, anchored by a Cooper’s Food Store and Shopper’s Research, KelownaDrug Mart. Other tenants secured for the site are Great Clips, Starbucks and a dental DIRECT TEL: 250 861 8113office, Dr. Daniel Rootes. wendy.dyck@colliers.comCRU rents range from $22 per square footup to $30 per square foot with 800 squarefeet up to 5,100 square feet available. This report has been prepared by Colliers International forOpportunities exist for insurance, medical advertising and general information only. Colliers Internationalclinics, fast food, optical, hearing clinics and makes no guarantees, representations or warranties of any kind, express or implied, regarding the information including,neighborhood services. but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludesFor leasing enquires contact: unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication isRobert Gauley at 250.763.2300 the copyrighted property of Colliers International and/ or its licensor(s). © 2011. All rights reserved. Accelerating success.