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Due to COVID-19 health concerns, many businesses across Canada are operating at a limited capacity. Some provinces in the country, just this month, closed non-essential stores to prevent the further spread of the virus.
That accelerated the growth of online shopping, takeout orders and the need for more delivery service. Now retailers and CRE property owners are facing a more significant challenge - what to do with their empty or limited retail space?
Here are some of the best space-use models retailers are using right now.
Properties with multiple uses has historically been the primary go-to model for bustling business districts. Generally retail is on the ground level and either office, multifamily, and/or lodging on the upper floors. We are now starting to see industrial uses occupying what was once retail.
In this economy, since more people are shopping online, including grocery shopping, there’s a growing demand for warehouse and distribution centers. Retailers, like Target and Walmart, are increasingly securing more space to shorten the last-mile delivery.
This is a sign of relief for vacant mall department stores that sit unused. They are attracting more industrial uses. Some retail investors are converting their space to operate as a distribution hub for retail-related products.
During a pandemic economy or in strong economic times there is not much not to like about mixed-use properties. Mixed-use properties can bring balance and strength to your asset during all economic times, and investors CRE in Canada is showing a trend towards this type of property once again.
Mixed-use properties have always included retail, but now retail spaces themselves are becoming more mixed-use.
Not only are retail mall spaces converting to warehouse use, but retail centres are also welcoming office workers to help businesses with high workplace density. Many are turning their retail space into medical offices, research centres, daycare centres, self-service grocery stores, and more.
When it comes to food, people now mostly rely on delivery services and takeouts. Thus this is causing restaurants to make the switch to the ghost-kitchen model, where they only use the kitchen space to make food and prep food for delivery.
Canadian CRE property owners and retailers are quickly adapting to emerging retail trends by transforming their spaces into models that can continue generating profits. In doing so, they’re making retail CRE investors and developers adapt as well in their search for new profitable opportunities.
Developers are now creating versatile spaces that can offer a variety of uses. Rather than focusing only on retail or only on mixed-use, they’re bringing them together to fit consumers’ expectations and new business needs.
These new retail business models are creating numerous opportunities for Canadian retail CRE investors. The retail CRE market in the country keeps evolving during the pandemic.