Shawn Saraga
SVP & Market Leader
Toronto
The basic fact of the Canadian retail market that is fundamentally different from dealing in most other global markets is that we have much fewer landlords than the rest of the world.
In fact, at the time of this publishing, nine landlords control almost 50% of main street retail today across the country. There are another 60 landlords that control another 40% of the properties available on the market. Then we have about 1,000 small landowners who control the remaining 10%. Our job in Canada is to maintain strong relationships with these landlords in order to secure our clients the best possible locations in the country. Most sites in Canada are leased years in advance of build out or years in advance of a lease expiration taking place. Now the big question may be, “Why is this?”
Canada is a big country with a very small population and, therefore, our populations are dense where they occur. To put this into perspective, the Greater Toronto Area houses almost 20% of the entire country’s population. Given the distances between spaces when traveling the density of retail nodes, this places a huge amount of importance on the prime corners in any community. As a result, landlords, the top nine in particular, have purchased the majority of these sites across the country and control those properties. Anchors play a huge factor as well and the distance between minimum population bases for a qualified Walmart space could be hours apart from location to location by automobile, making them even more valued in the communities where people want to open up. As a result, the desirable retail sites are just as hard to find in small communities as they are in cities.
The second reason is that Canada has very strict zoning guidelines. Drive-thru opportunities have been relegated to grandfathered opportunities for the most part. Automotive zoning is as likely to be found as a pot of gold at the end of a rainbow. Childcare zoning requires a contiguous outdoor playground space that is no less than 50% of the interior space. The requirements are strict and difficult to source making the opportunities on one side of a street dramatically different from the ones on another side of a street. Signage approvals are very much a driving factor here as well as most municipalities will take issue with brightness, size and volume of signage. This can make lamp post signs for drive-thru’s an impossibility and sometimes even pylon signs are turned down.
All of this being said, Canada is a great country to expand to and numerous American retailers are experiencing tremendous success. The recent grand openings of Nordstrom were to huge fan fair and record numbers. Nordstrom aligned themselves with one of Canada’s top nine landlords on the outset and have positioned themselves well for long-term steady growth. Walmart continues to expand aggressively across the country and had their start in a great landlord relationship with Smart Centres. Now, Saks Fifth Avenue, Simons and others are experiencing similar success following this formula. Canada offers a great opportunity to succeed for parties who know how to Canadianize their brand and work within our communities. While our cultures are different, our consumer habits are similar and create great opportunities for American retailers to experience success north of the border!
Written by Shawn Saraga, SVP & Market Leader, Toronto