Failing malls are turning into prime condo real estate projects. With the high number of store closures, it’s the most beneficial way to keep revenues up for property owners. This might mean massive changes for department stores. Canadian mall owners seek to capitalize on a supply-constrained housing market while minimizing their vulnerability to the struggling retail market. They are creating new mixed spaces, with specialty stores, restaurants, and residential units. According to RioCan REIT, Canada’s largest property trust, this will create lively, well-located neighborhoods as well as foster a community and ensure safer spaces. “The population is growing and there’s no real land left in Canada’s biggest cities,” states RioCan Chief Executive Ed Sonshine. “Demand for retail space isn’t growing…it makes perfect sense on so many levels.”
According to the Financial Post, developers, such as RioCan REIT and the property units of some Canadian pension funds, are turning major lands that have not been put to best use historically into housing in one of the world’s priciest, supply-constrained residential markets. This includes lands containing parking lots and low-rise retail stores.
RioCan is creating ePlace in Toronto, a development with about one-fifth of the retail space typically in its other malls, 1,100 condos and apartments, and some offices. The development is expected to be finished by early 2019, and the condos have already been sold. Buyers and owners of other malls are also joining in.
Did you know that the most productive mall in Canada is Yorkdale Shopping Centre? According to a Retail Council of Canada study, the mall received $1,653 in sales per square foot for the year ending June 30. In addition, the owner of Oxford Properties plans to add as many as 1,496 residential units, offices and a hotel. “Oxford is betting that better public transit and technological changes, such as autonomous vehicles, will reduce demand for parking,” said Bradley Jones, head of retail at Oxford.
With the recent closings of big retail outlets like Sears and Target, real estate owners are rethinking how to plan and change their properties in the future.
Source: Financial Post