Retail has been a key asset class for investors to buy and hold with an eye to redevelopment, Matthew Boukall, senior director, residential, with Altus Group Data Solutions Inc., said in a recent market overview. The latest investment numbers from Altus Group indicate that of the $10.1 billion worth of investment deals greater than $1 million in 2017’s first three quarters, retail deals represented $1.6 billion or 15%. While some blame the ongoing battle between bricks and clicks, the shtick is wearing thin for Patrick Phillips, CEO of the Urban Land Institute. Discussing emerging trends in real estate with brokers, developers and planners in Vancouver last month, he took an irenic stance.
“Retail right now is clearly more out of favour than other sectors,” he acknowledged. But within a decade, perhaps within five years, Phillips believes online and offline sales operations will function as one.
“The conversation about bricks versus clicks will have gone away because bricks and clicks will be essentially inextricable. The formats of retailing will effectively merge.”
The challenge will be eliminating the hassle of shopping while giving people a reason to show up in shops, said Michael Penalosa, managing principal of Thomas Consultants Inc. in Vancouver.
“One of the main reasons why retailers lose a sale, outside of bad service and too expensive, is a lineup – a lineup and a cashier,” he said. “Today, you can bypass that – you can go to your phone. And even better, you can get it delivered by the end of the day.”
To be successful, physical stores will have to give people a reason to show up rather than avoid them, providing the support people want when they shop online and the engagement that leads to brand loyalty.
“If there’s no experience, I think there’s going to be a bit of trouble,” Penalosa said.
The importance of stores accommodating people and commerce was key when Beedie Development Group broke ground October 24 at East 2nd and Quebec on a 60,000-square-foot, three-storey building for Mountain Equipment Co-op (MEC).
While traditional retail currently lacks cachet, dignitaries including Mayor Gregor Robertson touted the 35,000-square-foot flagship store the building will give MEC as a ray of social and economic light.
“Beyond the Creekside Community Centre, we do need more places for people to gather and go forth,” he said, describing the store as a “community hub.” The top floor will feature a community amenity room.
MEC has excelled at integrating e-commerce within its operations, but the fact the physical store would employ flesh-and-blood people thrilled the mayor, too.
“It’s fantastic to have this commercial job space here as well,” he said. “Green jobs in creating green buildings and selling green products are really at the core of Vancouver’s job growth.”
The building aims for Leadership in Energy and Environmental Design (LEED) Gold certification and will feature extensive structural use of wood as well as a landscaped roof for the benefit of neighbours.
“We love to see that further and deeper investment in those green credentials and pushing the pace with green building technology and products,” said Robertson.
A wine storage facility will replace the Okanagan Tree Fruit Co-operative’s former packing house in Naramata.
A consortium led by David Enns of Laughing Stock Vineyards and Rob Gritten, a principal both of brokerage Avison Young and Lola Capital Corp., plans to renovate the structure to store wine for the three dozen wineries on the Naramata Bench. The renovations will reflect the neighbourhood character, something the vacant structure can’t be said to have done.
Mik Ball and Steven Jaeger are also investors in the project, which is set to be up and running in 2018. The property originally consisted of two parcels, the smaller of which the Regional District of Okanagan-Similkameen acquired in June 2016 for $1.15 million. The purchase price for the remaining 4.6 acres was not disclosed.
Colliers International originally listed the property in 2008 for $10 million. The offering was rejigged in 2014, and the list price cut to $4.9 million. •