It is hard to believe the hype surrounding the announcement Target was coming to Canada just FOUR years ago.
The frenzy suggested this was going to herald a new era for consumers. Many analysts were right; things were about to change, but they got it completely wrong on the implications for the retail industry.
Not long after the publicity about the arrival and opening of Target, the company was posting “Closing Down Sale” signs and saying goodbye to Canada.
Another traditional giant, Sears Canada, is presently going through the insolvency process as executives try to see if there is a way to save at least part of the ailing company. After decades of being a mainstay for many Canadians, Sears could soon become an afterthought for shoppers.
Changing for the better
While some are preparing obituaries for bricks and mortar retailers, it is worth remembering each and every day millions of Canadians leave their homes and go shopping; this is unlikely to change in the foreseeable future.
More likely, what we’re experiencing is an industry going through a significant transition phase – this is about the evolution of the traditional dynamic between buyer and seller.
If we look at large covered malls, they are having to move away from simply offering a mix of outlets under one roof – now it’s about making a customer’s visit an experience.
Stores are starting to establish themselves as communities where customers can connect with a brand. This is happening as the digital and real worlds become more integrated . . . often in a seamless transition.
The New Manifesto for retail
The successful commercial real estate business model used by ReDev Properties, for more than two decades, is based on identifying plazas in mature neighbourhoods that require specialized expertise and in some cases significant investment, usually over a five- to 10-year period.
Managed properly, they produce good cash flow revenues and become an appreciating asset.
In many cases, this will remain the blueprint for our future projects but there is also the need to respond to how planners and politicians are tackling population growth and limited space within urban areas.
The challenge of avoiding urban sprawl is to become more creative within the municipal boundaries and that means intensification. While the concept is widely used, there’s no universal agreement on its definition. Most commonly it means more people living closer together, with developments going up rather than out.
One area offering great potential is retail plazas in mature and desirable neighbourhoods – a familiar sector in the ReDev portfolio. As the foundation for mixed-use developments, they offer a number of benefits including reducing the carbon footprint, enhancing community identity and creating economic opportunities.
In some ways, having the services and retail outlets closer to where people live is similar to how cities were developed at the start of Canada’s history 150 years ago. This time, using urban land more effectively can reduce automobile activity and make better use of the existing infrastructure resources.
At present, we are looking at a couple of projects that may be ideally suited to this type of development.
The first step involves applying for the area to be rezoned, consulting with elected officials, planners and most importantly, the people living in the community. This is a commitment that goes beyond upgrading a plaza but involves redefining a neighbourhood and understanding the long-term goals of the investment.
Cashing in on convenience
The benefits of intensification for investors and the community are significant: having retail shops on the ground floor, with services like doctors, dentists or even yoga classes on the floor above and then capped by an apartment block, changes the whole dynamic of a neighbourhood.
The logistics of working with existing tenants and our neighbours will be considerable but all issues can be overcome by taking into consideration the unique features of each community and setting realistic goals.
We are taking a strategic approach convinced that, for some plazas, this is the best way forward for people, the environment and our investors.
Richard Crenian is the founder and President of ReDev Properties. Since its founding in 2001, Richard and ReDev Properties have grown the asset management company using a long-term approach to manage numerous commercial properties, primarily located in Western Canada. To learn more about Richard please visit redevgroup.ca