Mall owners in Canada are seeking to capitalize on the increasing demand for housing in a supply constrained market by adding condos and apartments to their shopping centers.
Canada’s top developers like RioCan REIT and property units of some Canadian pension funds are converting prime land, that hitherto had not been put to best use – such as parking lots or low-rise retail- into residential developments in the face of a continuous rise in demand for housing.
Between October 2000 and 2015, more than 25000 new homes were available for purchase in the greater Toronto area on an average, comparatively, in October 2017 only 12,500 homes were available. The rental market fares no better, despite highest level of construction in the third quarter in the last 25 years Toronto has a 1% rental vacancy rate.
The population is increasing, but the land isn’t and demand for retail space isn’t growing, hence, the logical step is to utilize such land. In Toronto, RioCan is developing ePlace, with 1100 condos and apartments and only about 1/5th of retail space that some of their other malls have. The relevance of this move is evident in the fact that almost all of the condos which are expected to be finished by 2019 are already sold.
Another important aspect of this new trend is the rise in retail vacancies. With retail giants like Sears and Target closing their Canada operations, more and more people are thinking of alternate uses for their sites. There is also evidence to suggest that the traditional mall design of anchor stores with chain outlets and fast-food restaurants may no longer be profitable in the future.
Many of the redevelopments include placing specialty stores, restaurants and other non-typical mall features outside of the mall, which, combined with the housing units make for vibrant and safer spaces that are appealing.