Closed Stores at Canadian Malls Are Being Converted To Condos.
As stores in Canadian malls close, the malls are now converting these stores to condos for the holidays. Mall owners are now including apartments and condos into their shopping centers, trying to take advantage of the supply constrained Canadian housing market at the same time decreasing vulnerability to the retail sector.
Some developers like RioCan Real Estate Investment Trust, which happens to be Canada’s largest property trust firm with the property units of a part of Canadian pension funds are converting land that is being wasted to good use. Places like parking lots and slow moving retail shops are being turned into housing in one of the world’s least affordable and supply constrained residential markets.
As stated by the Altus Group, in Toronto 12,500 new homes were available to buy in the month of October. This is less than half the median by October of 2000 and 2015.
The Canadian Mortgage and Housing Corp. stated that Toronto’s rental vacancy rate is at 1 per cent and says that the rental market is very tight. Urbanation Inc. also says that regardless of having the highest level of rental construction in 25 years in the third quarter.
In two of Canada’s priciest housing markets namely Toronto and Vancouver, house prices went up by 40 per cent in Toronto and 60 per cent in Vancouver. With the introduction of new policies as an attempt to bring down price gains but turned out to add more demand with limited supply.
RioCan Chief Executive Ed Sonshine noted that “The population is growing and there’s no real land left. Demand for retail space isn’t growing.. it makes perfect sense on so many levels.”
However currently RioCan is establishing ePlace in Toronto, a project of up to fifth of the retail space of a few other malls. A total of 1,100 condominiums and apartment and a couple of offices.
There are 466 rental apartment which are part of the 10,000 residential units that the shopping center developer intents to own by 2025 across 50 properties.
So its been a good idea since condos at ePlace which are projected for them to be completed by 2019 have already been purchased. Some of the owners of popular malls are joining in.
There are more mall vacancies being reported now. Matthew Smith, head of national retail investment at Jones Lang LaSalle said due to rising retail vacancies got worst by the transferring of property of Sears Canada and Target Corp’s Canadian operations in the last couple of years, “have caused even more people to start thinking that there are alternate uses for part of their sites.”
He also noted that if a concentration of retailers around transport nodes is affecting business regardless of their location, changing some to residential could reduce that burden.
Although some owners like Cardillac Fairview (CF), a unit of Ontario Teachers’ Pension Plan, came to notice that the traditional mal, including department stores that comes with chain stores and fast-food restaurants do not bring as much profit these days.
Finley McEwen, senior vice president for development for CF said the company plans to spend up to C$2 billion to add residential units at four of its malls, including the one they are currently building in Toronto.
