The first half of this year has been characterized by changing landscapes in Calgary’s retail sector, according to a new report by commercial real estate firm CBRE.
“Store closures, international trade disagreements, and increased labour shortages combined with a slowly recovering economy has created uncertainty in the marketplace,” it said.
The overall retail vacancy rate increased from 5.6 per cent in the first half of 2018 to 5.9 per cent in the first half of 2019.
Several notable store closures contributed to 86,907 square feet of negative absorption in the first half.
CBRE also said that property tax increases continue to present challenges for retailers in an already sluggish economy.
“Shopping centres in Calgary will continue to transform as landlords invest heavily in their properties to keep up with changing consumer shopping patterns and evolving retail trends,” said the report.
“The declining profit margins for independent retailers, restaurants and SMB’s is creating challenges for landlords to renew and lease vacant space, forcing landlords to look at creative alternatives such as increased inducements to maintain net effective rents.”
The report said that starting in 2017, the closure of five Sears department stored returned about 650,000 square feet of retail space to the Calgary market. There have been other high-profile store closures so far this year in the market including Town Shoes, Gymboree and Home Outfitters.
“The influx of space is expected to grow as the store closures predicted for 2019 are creating short-term challenges for landlords looking to fill current and future vacancy,” said CBRE.