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Market Trends & Analysis for 2015
ISCS Professional Development Webinar
August 27, 2015
Andrew Garrett
Director, Development
Agenda
 Canadian Outlook for 2015
 Economic Outlook
 Retail Outlook
 Retail Trends
 Category Growth
 Luxury Expansion
 Growth Markets
 Growth by Region
 Growth by Class
 Q&A
Canadian Outlook
Economic Outlook | 2014 in Review
 Continued growth in housing market
 Slower employment recovery than
anticipated
 Low interest rates maintained
manageable debt levels
 Record low interest to household-disposable-
income ratio of 6.8%
 Real GDP growth, trade surplus, and
increased consumer prices due to
accelerated inflation
Economic Outlook | 2015 Forecast
 Sinking commodity and oil prices
 Record high household debt-income
ratio of 162.6%
 Bank of Canada overnight interest rate
cut to 0.5%
 Exports and investment outlays to increase as a
result
 Cheaper Canadian dollar may curb
cross-border shopping
Economic Outlook | Real GDP Growth
 Reduced pace of economic recovery in Canada
compared to other G8 nations
2.0%
0.3% 0.2%
-1.7%
1.6% 1.7%
2.2%
0.1%
3.4%
2.5%
0.4%
1.6%
-0.4%
-0.1%
2.6%
2.4%
1.4%
3.4%
2.2%
1.2%
1.6%
0.5%
1.0%
2.7%
3.1%
1.8%
3.5%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
Canada France Germany Italy Japan United
Kingdom
United States EU Global
2013
2014
2015
Economic Outlook | Canadian Interest Rates
 Overnight lending rate cut twice by Bank of Canada
down to 0.5% in 2015
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Bank of Canada Overnight Rate
Economic Outlook | Canadian Spending
 Overall slower growth in consumer spending in 2015
Clothing and
Footwear
Leisure and
Recreation
Hotels and
Catering
Total Other
Consumer
Expenditure
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
ForecastYoY % Change in Canadian Expenditure Adjusted for Inflation
Shopping Centre Outlook | Supply
 Total shopping centre GLA plateauing at 542M SF
525.6
532.6
541.8 541.9
515
520
525
530
535
540
545
2010 2011 2012 2013
TotalShoppingCentreGLAinCanada(millionsofSF)
Five Largest Canadian
Shopping Centre Owners
47,878,000 SF
28,100,000 SF
27,816,000 SF
24,564,000 SF
24,555,000 SF
Shopping Centre Outlook | Demand
 Total Retail sales outpacing shopping centre sales
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$0
$100
$200
$300
$400
$500
$600
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
TotalAnnualCanadianSales($billions)
Shopping Centre Sales as a
Percentage of Total Retail Sales
Annual Canadian Total Retail Sales
($ billions)
Annual Canadian Shopping Centre Sales
($ billions)
Retail Trends
 Polarized Consumer and Retail Environment
 Mid-range retailers losing market share to luxury and discount brands
 Influx of Foreign Retailers
 Incoming retailers looking to target the growing luxury market
Retail Trends | Growth Categories
Retail Trends | Luxury
 Canadian luxury segment CAGR of 30% expected
between 2015-2018
 Market can absorb an additional 2M SF of luxury retail
 Saks, Nordstrom, Holt Renfrew, Harry Rosen and
others have announced 1.5M SF of new luxury space
 Luxury brands moving from high streets to malls
Luxury Sales 2014 $6.0B $72.4B
Percent ofTotal Retail Sales 2014 1.2% 1.5%
Growth Markets
Growth Markets | Growth by Region
 Solid west coast retail growth and performance
BC
$861PSF
+15.3%
Prairies
$631PSF
+0.7%
ON
$725PSF
+8.5%
QC
$514PSF
+7.4%
Atlantic
$559PSF
+9.3%
Vancouver Edmonton Calgary Toronto Ottawa Montreal
+16.7% +5.7% +3.7% +8.8% +0.4% +8.1%
AB
$770PSF
+2.8%
Canada
$692PSF
+16.7%
Thank you. Questions?
Economic Outlook | Canadian Debt and Income
 Household debt continuing to outpace total income
Total Debt
Total Income
Total
Disposable
Income
$0.00 T
$0.50 T
$1.00 T
$1.50 T
$2.00 T
$2.50 T
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Forecast
ANDREW’S NOTES
Retail Trends | Category Growth
 Strong projected growth for Health & Beauty retailers
1.1%
0.6%
3.6%
1.2%
1.6% 1.6%
0.6%
-3.5%
2.2%
0.4%
0.6%
-1.1%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Apparel and
Footwear
Electronics and
Appliances
Health and
Beauty
Home and
Garden
Leisure and
Personal Goods
Other Non-
Grocery
2009-14 CAGR
2014-19 Forecasted CAGR
ANDREW’S NOTES
Retail Trends | e-Commerce
 80% of Canadians live in the country’s 15 largest cities,
making urban centres the hubs of retail activity
 Canadian e-Commerce segment CAGR of 11.3%
between 2015-2020
 Amazon.com Inc. commands a 10.5% market share of
all Canadian e-Commerce
Forecasted e-Commerce Sales 2015 $27.0B $347.3B
Percent ofTotal Retail Sales 2015 5.7% 7.0%
ANDREW’S NOTES
Retail Trends | Multi/Omnichannel
 61% of Canadian online shoppers purchase
from foreign omnichannel retailers
 Omnichannel retail defined as ways to “drive the
customer from click to brick and back again”
 Engage with Email, CRM, & Loyalty
 93% of Canadian internet users have opted into email
marketing. 44% have made a resultant purchase
 Digital Marketing
 Only 32% of consumers engage with brands via social media
 Integrated Mobile Experience
 IKEA allows consumers to project 3D images of IKEA
furniture into their homes using the company’s mobile app
ANDREW’S NOTES
Growth Markets | Growth by Class
Neighbourhood Regional Power Centre
NET RENT
6 MO.
TREND
VACANCY
RATE
6 MO.
TREND
NET RENT
6 MO.
TREND
VACANCY
RATE
6 MO.
TREND
NET RENT
6 MO.
TREND
VACANCY
RATE
6 MO.
TREND
Victoria
High $24
↓
4.5%
↑
$38
↓
6.3%
↑
$27
↓
1.6%
↑Low $16 0.0% $30 0.0% $20 0.0%
Vancouver
High $30
↓
10.0%
↑ $200
↔
7.0%
↔ $20
↑
3.0%
↔Low $14 5.0% $28 3.0% $10 2.0%
Kelowna
High $28
↔
15.0%
↑ $110
↔
10.0%
↑ $30
↓
5.0%
↑Low $22 5.0% $50 5.0% $20 0.0%
Calgary
High $32
↔
1.5%
↔ $200
↔
2.0%
↔ $80
↑
2.0%
↔Low $24 1.5% $60 1.8% $35 1.0%
Edmonton
High $35
↔
3.0%
↔ $35
↔
3.0%
↔ $40
↔
3.0%
↔Low $22 1.0% $25 1.0% $25 1.0%
Saskatoon
High $36
↑
5.0%
↔ $60
↑
25.0%
↑ $34
↔
3.0%
↔Low $26 0.0% $38 5.0% $22 0.0%
Regina
High $32
↔
3.5%
↔ $50
↔
4.0%
↔ $48
↔
2.0%
↔Low $24 1.0% $30 0.0% $26 0.0%
Winnipeg
High $32
↔
6.0%
↔ $100
↑
5.0%
↔ $35
↔
4.0%
↑Low $20 2.0% $40 1.0% $22 0.0%
Toronto
High $25
↓
8.0%
↔ $130
↓
3.0%
↔ $33
↔
4.0%
↑Low $12 5.0% $25 1.0% $18 2.0%
Ottawa
High $25
↔
10.0%
↔ $100
↔
10.0%
↔ $35
↔
10.0%
↔Low $15 5.0% $50 0.0% $15 5.0%
Montreal
High $15
↔
7.0%
↔ $18
↔
5.0%
↔ $20
↔
5.0%
↔Low $10 5.0% $15 3.0% $17 3.0%
Halifax
High $25
↑
8.0%
↔ $75
↔
1.3%
↓ $25
↑
3.7%
↑Low $20 7.0% $70 1.0% $18 3.4%
ANDREW’S NOTES

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ICSC Education Webinar

  • 1. You will receive a recorded copy of this webinar within 24 hours.
  • 2. Market Trends & Analysis for 2015 ISCS Professional Development Webinar August 27, 2015 Andrew Garrett Director, Development
  • 3. Agenda  Canadian Outlook for 2015  Economic Outlook  Retail Outlook  Retail Trends  Category Growth  Luxury Expansion  Growth Markets  Growth by Region  Growth by Class  Q&A
  • 5. Economic Outlook | 2014 in Review  Continued growth in housing market  Slower employment recovery than anticipated  Low interest rates maintained manageable debt levels  Record low interest to household-disposable- income ratio of 6.8%  Real GDP growth, trade surplus, and increased consumer prices due to accelerated inflation
  • 6. Economic Outlook | 2015 Forecast  Sinking commodity and oil prices  Record high household debt-income ratio of 162.6%  Bank of Canada overnight interest rate cut to 0.5%  Exports and investment outlays to increase as a result  Cheaper Canadian dollar may curb cross-border shopping
  • 7. Economic Outlook | Real GDP Growth  Reduced pace of economic recovery in Canada compared to other G8 nations 2.0% 0.3% 0.2% -1.7% 1.6% 1.7% 2.2% 0.1% 3.4% 2.5% 0.4% 1.6% -0.4% -0.1% 2.6% 2.4% 1.4% 3.4% 2.2% 1.2% 1.6% 0.5% 1.0% 2.7% 3.1% 1.8% 3.5% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% Canada France Germany Italy Japan United Kingdom United States EU Global 2013 2014 2015
  • 8. Economic Outlook | Canadian Interest Rates  Overnight lending rate cut twice by Bank of Canada down to 0.5% in 2015 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Bank of Canada Overnight Rate
  • 9. Economic Outlook | Canadian Spending  Overall slower growth in consumer spending in 2015 Clothing and Footwear Leisure and Recreation Hotels and Catering Total Other Consumer Expenditure -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ForecastYoY % Change in Canadian Expenditure Adjusted for Inflation
  • 10. Shopping Centre Outlook | Supply  Total shopping centre GLA plateauing at 542M SF 525.6 532.6 541.8 541.9 515 520 525 530 535 540 545 2010 2011 2012 2013 TotalShoppingCentreGLAinCanada(millionsofSF) Five Largest Canadian Shopping Centre Owners 47,878,000 SF 28,100,000 SF 27,816,000 SF 24,564,000 SF 24,555,000 SF
  • 11. Shopping Centre Outlook | Demand  Total Retail sales outpacing shopping centre sales 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% $0 $100 $200 $300 $400 $500 $600 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 TotalAnnualCanadianSales($billions) Shopping Centre Sales as a Percentage of Total Retail Sales Annual Canadian Total Retail Sales ($ billions) Annual Canadian Shopping Centre Sales ($ billions)
  • 13.  Polarized Consumer and Retail Environment  Mid-range retailers losing market share to luxury and discount brands  Influx of Foreign Retailers  Incoming retailers looking to target the growing luxury market Retail Trends | Growth Categories
  • 14. Retail Trends | Luxury  Canadian luxury segment CAGR of 30% expected between 2015-2018  Market can absorb an additional 2M SF of luxury retail  Saks, Nordstrom, Holt Renfrew, Harry Rosen and others have announced 1.5M SF of new luxury space  Luxury brands moving from high streets to malls Luxury Sales 2014 $6.0B $72.4B Percent ofTotal Retail Sales 2014 1.2% 1.5%
  • 16. Growth Markets | Growth by Region  Solid west coast retail growth and performance BC $861PSF +15.3% Prairies $631PSF +0.7% ON $725PSF +8.5% QC $514PSF +7.4% Atlantic $559PSF +9.3% Vancouver Edmonton Calgary Toronto Ottawa Montreal +16.7% +5.7% +3.7% +8.8% +0.4% +8.1% AB $770PSF +2.8% Canada $692PSF +16.7%
  • 18. Economic Outlook | Canadian Debt and Income  Household debt continuing to outpace total income Total Debt Total Income Total Disposable Income $0.00 T $0.50 T $1.00 T $1.50 T $2.00 T $2.50 T 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Forecast ANDREW’S NOTES
  • 19. Retail Trends | Category Growth  Strong projected growth for Health & Beauty retailers 1.1% 0.6% 3.6% 1.2% 1.6% 1.6% 0.6% -3.5% 2.2% 0.4% 0.6% -1.1% -4% -3% -2% -1% 0% 1% 2% 3% 4% Apparel and Footwear Electronics and Appliances Health and Beauty Home and Garden Leisure and Personal Goods Other Non- Grocery 2009-14 CAGR 2014-19 Forecasted CAGR ANDREW’S NOTES
  • 20. Retail Trends | e-Commerce  80% of Canadians live in the country’s 15 largest cities, making urban centres the hubs of retail activity  Canadian e-Commerce segment CAGR of 11.3% between 2015-2020  Amazon.com Inc. commands a 10.5% market share of all Canadian e-Commerce Forecasted e-Commerce Sales 2015 $27.0B $347.3B Percent ofTotal Retail Sales 2015 5.7% 7.0% ANDREW’S NOTES
  • 21. Retail Trends | Multi/Omnichannel  61% of Canadian online shoppers purchase from foreign omnichannel retailers  Omnichannel retail defined as ways to “drive the customer from click to brick and back again”  Engage with Email, CRM, & Loyalty  93% of Canadian internet users have opted into email marketing. 44% have made a resultant purchase  Digital Marketing  Only 32% of consumers engage with brands via social media  Integrated Mobile Experience  IKEA allows consumers to project 3D images of IKEA furniture into their homes using the company’s mobile app ANDREW’S NOTES
  • 22. Growth Markets | Growth by Class Neighbourhood Regional Power Centre NET RENT 6 MO. TREND VACANCY RATE 6 MO. TREND NET RENT 6 MO. TREND VACANCY RATE 6 MO. TREND NET RENT 6 MO. TREND VACANCY RATE 6 MO. TREND Victoria High $24 ↓ 4.5% ↑ $38 ↓ 6.3% ↑ $27 ↓ 1.6% ↑Low $16 0.0% $30 0.0% $20 0.0% Vancouver High $30 ↓ 10.0% ↑ $200 ↔ 7.0% ↔ $20 ↑ 3.0% ↔Low $14 5.0% $28 3.0% $10 2.0% Kelowna High $28 ↔ 15.0% ↑ $110 ↔ 10.0% ↑ $30 ↓ 5.0% ↑Low $22 5.0% $50 5.0% $20 0.0% Calgary High $32 ↔ 1.5% ↔ $200 ↔ 2.0% ↔ $80 ↑ 2.0% ↔Low $24 1.5% $60 1.8% $35 1.0% Edmonton High $35 ↔ 3.0% ↔ $35 ↔ 3.0% ↔ $40 ↔ 3.0% ↔Low $22 1.0% $25 1.0% $25 1.0% Saskatoon High $36 ↑ 5.0% ↔ $60 ↑ 25.0% ↑ $34 ↔ 3.0% ↔Low $26 0.0% $38 5.0% $22 0.0% Regina High $32 ↔ 3.5% ↔ $50 ↔ 4.0% ↔ $48 ↔ 2.0% ↔Low $24 1.0% $30 0.0% $26 0.0% Winnipeg High $32 ↔ 6.0% ↔ $100 ↑ 5.0% ↔ $35 ↔ 4.0% ↑Low $20 2.0% $40 1.0% $22 0.0% Toronto High $25 ↓ 8.0% ↔ $130 ↓ 3.0% ↔ $33 ↔ 4.0% ↑Low $12 5.0% $25 1.0% $18 2.0% Ottawa High $25 ↔ 10.0% ↔ $100 ↔ 10.0% ↔ $35 ↔ 10.0% ↔Low $15 5.0% $50 0.0% $15 5.0% Montreal High $15 ↔ 7.0% ↔ $18 ↔ 5.0% ↔ $20 ↔ 5.0% ↔Low $10 5.0% $15 3.0% $17 3.0% Halifax High $25 ↑ 8.0% ↔ $75 ↔ 1.3% ↓ $25 ↑ 3.7% ↑Low $20 7.0% $70 1.0% $18 3.4% ANDREW’S NOTES