Momentum Grows for Toronto’s Street Retail | RENX
The street-front retail rental and transaction business in Toronto is in better shape than many people probably think, according to CBRE.
Retail leases rose 60% between Q1 and Q2 of 2021, and momentum continued as pent-up demand unleashed.
“There have been more rentals in the last 60 days than likely in the last year and a half,” executive vice president and head of CBRE’s urban retail team, Arlin, told RENX. Markowitz.
Markowitz said he was hosting New York City officials seeking to lease retail space on a weekly basis in the upscale neighborhoods of Bloor and Yorkville in Toronto since fully vaccinated Americans were allowed to enter Canada without quarantine on August 9.
âBefore that there was a lot of activity and a lot of people looking and were about to make an offer to rent a property, but they couldn’t sign a deal until they came personally,â he said. said Markowitz. âWhen they arrived, the agreements took place.
Commercial rents have fallen
âIn many segments of the market, it has been more attractive for retailers to enter because the rents have changed. In some areas, rents have fallen, giving traders the opportunity to become more profitable. “
Retail rents are down 20-25% from pre-pandemic levels in parts of Toronto, according to Markowitz, and retailers want to reserve space now because they don’t know how long the reduced rates will remain.
âWith something less than 2,000 square feet, the rents usually don’t change too much,â Markowitz said. âWe’re seeing the most movement in department stores.
Some of the largest recent leases cited by Markowitz include: a Nike store at Yorkdale Shopping Center; a new Apple Store nearly 20,000 square feet at The one at Yonge and Bloor streets; and a land of 12,000 square feet LCBO store in the Manulife Center.
Retail Rental at The Well
Well the mixed-use development in the western portion of downtown will have 420,000 square feet of space for retail and restaurant services. RioCan REIT has used CBRE’s assistance to lease 110,000 square feet to date.
Markowitz says fitness club Sweat and Tonic takes 24,000 square feet. A large catering group has leased 78,000 square feet for six different restaurants in various parts of The Well.
Pharmaprix pharmacy has leased 16,000 square feet while 10,000 are for tenants who meet daily needs such as banking services and barista-style coffee. Other retailers are on the verge of signing leases at The Well, Markowitz added.
Markowitz said The Well’s food hall and lobby market will be over 65,000 square feet.
“It’s like the Saint-Laurent Market on steroids. It will be something that no one in Toronto has ever seen before. That’s the real anchor of The Well and it’s super exciting.
Other hot selling areas
The area around Yonge Street and Eglinton Avenue is also hot, as there are so many high rise developments in the neighborhood that will increase foot traffic and benefit retailers.
âIt won’t necessarily translate into a fashion district, but retailers in the service and food and beverage sectors can really thrive in a place like this, because the volume of humans that live there, working there and walking there is going to be amazing. Said Markowitz.
Ossington Avenue between Queen Street and Dundas Street has resisted the pandemic, including a strip of five European-inspired shops under 1,500 square feet each from 46 to 54 Ossington owned by Hull brand.
âI attribute some of Ossington’s recent success to some of the owners who are deliberately setting up small stores,â Markowitz said. âIt’s something that has really evolved in the market. “
Commercial real estate transactions are on the increase
As investment in street-level retailers in Toronto bottomed out in the second quarter of 2020, down 35% from a year earlier, the first quarter of 2021 was among the busiest on record. with $ 181 million in properties traded. However, not all of them are pure retail games.
âOn the investment side of our business, we absolutely see people working on the assembly of properties to create lots large enough for the redevelopment of mixed-use projects primarily focused on residential, whether it’s specially designed or high quality rentals. increase condominiums, âsaid Markowitz.
âHomeowners who have storefronts on one of our main streets – like Bloor, College, Queen, St. Clair, Yonge or Dundas – generally did not want to sell their properties, especially when there were tenants who were paying rent.
âBut all of a sudden there were more opportunities to get these guys to sell because they were sitting with vacancies. This created an opportunity for people to buy buildings and assemble sites. “
Land and building prices have continued to rise in Toronto because the multi-family market has held up thanks to COVID-19 and condominium sales are booming again after a lull during the height of the pandemic when there is had what Markowitz called a “little exodus to the suburbs.”
Vaccination passports will help
Markowitz observed more people returning to downtown offices, resulting in increased traffic to food courts and restaurants. He expects this to continue despite the increase in the number of COVID-19 cases due to the spread of the Delta variant.
The vaccines have been shown to be effective and the virus is better understood today than a year ago.
Many landlords and tenants are also working more closely and cooperatively, and protections have been put in place in many leases where landlords offer tenants a significant reduction in rents in the event of another government-mandated foreclosure.
Building owners want to keep tenants in place to help them keep paying their mortgages and property taxes.
âIf there is another lockdown, they are both going to suffer, but they are going to share the pain together and should both survive,â Markowitz said. “It won’t be just one person who shares the brunt of the problem.”
Introduction of vaccine passports in Ontario will ‘be a game-changer’, says Markowitz, as they should make people feel more comfortable eating indoors, going to gyms and shopping in stores. .
While Markowitz and his team are focused on Toronto, they work in Vancouver and Montreal and he said retail activity in those cities has been positive as well. He quoted the Barry’s Bootcamp opening of a fitness center brand in Vancouver and plans to do the same in Montreal, as encouraging signs.