Brick & Mortar Trending In Canadian Retail

Image Source: Prayitno

Image Source: Prayitno

New reports show online retailers increasingly moving into Canada’s offline brick and mortar retail property world.

Statistics Canada reports that offline retail is worth around $40 billion per month in Canada. Data from The Globe and Mail reports that online retail sales are still trying to hit the $30 billion per year mark.

Despite how much we are using smartphones and tablets, it seems the real money is still being spent in local malls and shopping plazas. That’s factual information new businesses and large entrenched retailers can’t ignore.

In addition to the promise of more revenues, there are other forces at work here too. Many newer retailers and even the large tech giants are simply finding customers have to be reached physically.

Others see brick and mortar or pop up shops as a vital testing ground for honing products. Many startups are also coming out in the media to proclaim that this is simply the next step after an initial, lean ‘digital first’ approach to launching. Given the massive surge in Canadian and American startups over the last few years, this could just be the tip of the iceberg in new retailers leasing space in Canada.

A Great Boost to One of Canada’s Favorite Real Estate Sectors

More retailers and stronger companies promise a boost to the retail property sector. Retail property has been a favorite and top performer thanks to Canada’s spending power, shopping habits and high leasing and sales per foot.

With some spreading rumors of a potential softening in some residential condo and home markets, retail is seen as an income producing bastion that will keep performing longer, and will see the first upward spike when homes prices and condos bounce back.

The new brick and mortar trend will in itself also increase the performance of Canadian retail properties for investors. Demand and competition for space means higher rents and better lease terms for retail property owners. The new buzz created by a new barrage of exciting offline retailers and their focus on experience is likely to get more customers out, and spending more time and money at these properties. That would increase prospects for overall property performance and net returns.

Combined with the new push towards urbanization and a smaller footprint, real estate investors should see some of their best potential in Canadian retail properties over the next few years.