Q3 2012 | RETAIL REPORTCOLLIERS INTERNATIONAL | MARKET REPORTMETRO VANCOUVERBRITISH COLUMBIA                              ...
MARKET REPORT | Q3 2012 | RETAIL | METRO VANCOUVER                                                                        ...
MARKET REPORT | Q3 2012 | RETAIL | METRO VANCOUVERInvestment MarketMARKET TRENDS                                          ...
MARKET REPORT | Q3 2012 | RETAIL | METRO VANCOUVER                                                                        ...
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Vancouver retail market report q3 2012 email

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Vancouver retail market report q3 2012 email

  1. 1. Q3 2012 | RETAIL REPORTCOLLIERS INTERNATIONAL | MARKET REPORTMETRO VANCOUVERBRITISH COLUMBIA Canadian Market Overview BRITISH Canadian economic performance remains in growth mode, albeit moderate in the East and COLUMBIA stronger in the West. The divide between East and West can be attributed to strong commodity prices 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.; however, more positively is the return of the 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, which combined with new U.S. retailers, will underpin demand for retail and Vancouver 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.Nanaimo Kelowna Metro Vancouver Market Overview Victoria The Metro Vancouver commercial real estate industry continues to show signs of improvement. Surrey Over the past year, investment activity has performed well, posting high transactional volumes and deal velocity. Compared to statistics dating back to 2002, the market tracked the best four quarters on record, overtaking the height of activity of 2006 and 2007. In addition to the strength of the overall market, there have been many positives signs withinBC MARKET: Colliers has five offices in British the local retail market, reducing concerns associated with the global economic turmoil.Columbia: Vancouver, Surrey, Kelowna, Nanaimo Consumer retail sales remain high, the overall vacancy rate is low and international retailersand Victoria. continue to enter the market. Increasing consumer retail sales are the most important positive sign of our local retail market. Metro Vancouver had a 6.3 percent growth rate in consumer retail sales from June 2011 to June 2012. These sales figures were captured before the changes in duty-free allowances for cross-border shopping were introducedMARKET INDICATORS June 1, 2012, which may slow growth. In any case, the statistics are encouraging and reflect high consumer confidence and a strong local economy. 2012 2012* Q3 Q4 RETAIL SALES - METRO VANCOUVERVACANCY June 2012 May 2012 June 2011 % Change From 1 Year Ago $2.55 billion $2.58 billion $2.40 billion 6.3%NET ABSORPTION 3,000.0 2,500.0CONSTRUCTION Millions 2,000.0RENTAL RATE 1,500.0CAP RATE 1,000.0 1 1 1 1 11 2 11 2 11 12 11 11 12 11 2 1 2 11 -1 -1 -1 r-1 -1 -1 -1 v- -1 r-1 p- c- n- ly- g- n- b ar ay n- n- ay t Ap ar Fe b No Oc De Se Ju Au M Ja Ap Ju M Ju Ja Fe M M* Forecast Source: Statistics Canadawww.collierscanada.com
  2. 2. MARKET REPORT | Q3 2012 | RETAIL | METRO VANCOUVER Leasing Market MARKET TRENDS Leasing activity has been consistent through 2012, with deal volume remaining steady, as many national, regional and eclectic retailers continue to seek additional space. There have been a few noteworthy international retailers entering the market, including Nordstrom and Victoria’s Secret who have leased flagship locations in downtown Vancouver. A low vacancy rate and strong sales per square foot are seen in well-anchored centres, but less centric retail nodes have been affected by the struggling global economy. In these areas, where rates have not adjusted and mid-range retailers are underperforming, the restructuring of deals is becoming more common as landlords try to avoid long-term vacancies. The flexibility in deal structure has resulted in landlords being more willing to negotiate rents, with larger tenant inducement packages and free rent periods becoming more common. MARKET FORECAST Metro Vancouver’s global popularity and economic stability will continue to drive national Nordstrom, Vancouver and international retailers into the market. While many will see the potential here compared “…global popularity and economic to other markets, others will absorb a loss for promotional purposes. Local retailers that stability will continue to drive are solely focused on their balance sheets, and some nationals that are not performing well, will find it difficult to maintain high rental rates as consumers worry about the future national and international of the economy. This will result in increased vacancy in more vulnerable areas, such as retailers into the market.” street front retail and smaller retail centres. Lastly, the abundance of retail supply coming to market will be absorbed if these quality locations continue to produce high sales. STREETFRONT LEASE AND VACANCY RATES Vancouver Lease Rates $/SF* Lease Rate Trend Vacancy Rate Trend** Robson Street - Burrard Street to Bute Street $180-220 Yaletown - Pacific Boulevard to Homer Street $30-60 South Granville - West Broadway to 15th Avenue $60-90 West Broadway - Granville Street to Cambie Street $35-80 West Broadway - Alma Street to MacDonald Street $28-45 Kerrisdale - West Boulevard to Vine Street $40-55 West 4th Avenue - Burrard Street to Balsam Street $30-65 Denman Street $40-70* For commercial retail unit of approximately 1,000 SF** Vacancy based on physically vacant street level retail units not within a shopping centreP. 2 | COLLIERS INTERNATIONAL
  3. 3. MARKET REPORT | Q3 2012 | RETAIL | METRO VANCOUVERInvestment MarketMARKET TRENDS Investment Sales FromOver the last four quarters, the investment market has outperformed the last ten years - Q3 2011 to Q2 2012consistently posting high deal volumes and transaction numbers. Total transactional volumefor the past year equaled $5.71 billion (for deals of $250,000 and greater), with retail product .3%accounting for 13 percent or $747 million of the total - the highest of any improved asset 10%class. The majority of retail transactional dollars occurred in the $250,000 to $3 million 9%range, nearly 40 percent, and approximately 25 percent in the $3 million to $10 million range,and 35 percent in the $10 million plus range (data provided by Realnet Canada Inc.). The 13% 55%continuing theme is a lack of supply, coupled with high demand from purchasers, identifies 12%current market conditions as a ‘seller’s market’. While this benefits vendors, it also meanshigher expectations from the purchaser’s standpoint, who want acquired assets to be inpristine condition. Land Industrial RetailMARKET FORECAST Apartment Office HotelDemand for quality retail product is expected to continue as the cost of borrowing remains *Source: Colliers International, Realnet Canada Inc.low and yields continue to outweigh other investment options. Capitalization rates for retailproduct in Metro Vancouver currently average between five and six percent, and are notexpected to increase unless interest rates rise. The Private capital investment sector isexpected to continue to purchase the bulk of available retail product, as it can benefit themost from sustaining lower yields in a long-term hold scenario. ECONOMIC INDICATORS Metro Vancouver 2013 2014 2015 CAN to USD Dollar Prime Interest Rate Capitalization Rates Shopping Centre Rental Rates Shopping Centre Vacancy Shopping Centre Net Aborption New Retail Supply / Construction Consumer Retail Sales* This table has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, express or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability COLLIERS INTERNATIONAL | P. 3
  4. 4. MARKET REPORT | Q3 2012 | RETAIL | METRO VANCOUVER 522 offices in 62 countries on six continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118 $1.8 billion in annual revenue 1.25 million square feet under management 12,300 professionals Intracorp’s MC2 - SW Marine and Cambie, Vancouver CONTACT INFORMATIONLocal Spotlight Story Retail Team:POPULARITY OF STRATIFIED RETAIL PRODUCT INCREASES Drew Gilbertson Oliver OmiWith the softening retail leasing market in less centric areas, developers are more commonly David Knight Casey Pollard*stratifying and selling off ground floor retail units, with much success. Developers benefit Doug Le Patourel Matt Saundersfrom this by avoiding the stress of constantly maintaining a tenant base and managing Ted Mildon Sheldon Scott* Sean Ogilvie Sherman Scottproperties. As well, owners can run their business out of their space, or lease and generatereturns. The driving factor behind the success of this type of product is the low cost ofborrowing allowing buyers to purchase at record low interest rates. Kirk Kuester Managing Director | Vancouver BrokerageStratified retail product is most popular in urban areas, with the majority of deal velocity DIRECT: +1 604 661 0814occurring in Burnaby, Richmond, Surrey and Vancouver. These projects are mainly mixed- kirk.kuester@colliers.comuse, with ground floor retail required by individual municipalities. Purchaser profiles aremuch the same as standard retail product, with 73 percent of the activity occurring in the Hari Minhasprivate investor category. There has been an increase in purchasing activity in the user Director of Marketing and Research |category, which accounted for 26 percent over last year. The ease of entry for users is Vancouver Brokeragelike no other product type with lower pricing, and where a steady long-term investment is DIRECT:+1 604 692 1408possible. hari.minhas@colliers.comTaking advantage of this trend is Intracorp that currently has five projects being constructed Michael Birminghamin Greater Vancouver, four of which have stratified retail. The company capitalized on the Research Associate | Retailgrowth market in Burnaby by selling out the project ‘Silver’ that has a total of 16,670 square DIRECT: +1 604 661 0885feet of commercial space, in a matter of days. The retail portion sold for approximately $700 michael.birmingham@colliers.comper square foot, a significant increase from the residential units, generating instant cashflow. The next significant project of Intracorp’s is MC², which is located on the northeastcorner of SW Marine Drive and Cambie Street in Vancouver that will surely generate thesame levels of success in this transit-oriented setting, directly across from PCI’s hugelysuccessful Marine Gateway project.Vancouver Downtown Office200 Granville Street, 19th FloorVancouver, BC V6C 2R6MAIN +1 604 681 4111 FAX +1 604 661 0849This report has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees,representations or warranties of any kind, express or implied, regarding the information including, but not limited to, warranties of content, accuracyand reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludesunequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damagesarising there from. This publication is the copyrighted property of Colliers International and/ or its licensor(s). © 2012. All rights reserved.*Personal Real Estate Corporation. PO11386 Accelerating success.www.collierscanada.com

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