Calgary’s 17th Avenue became famous as the ‘Red Mile’ when up to 55,000 Calgary Flames fans jammed the strip nightly during the 2004 Stanley Cup playoffs. The red-clad Flames lost that series but the image of a street bursting with youthful energy may have help inspire a current multimillion-dollar makeover of a four-block 17th Avenue strip.
Calgary-based Arlington Street Investments, founded by president and CEO Frank Lonardelli, is now completing the third of seven major developments planned for the avenue, including the first purpose-built rental units in the area in 25 years.
“The 17th Avenue corridor has a higher pedestrian traffic per capita than any other city street in Canada,” Lonardelli said, who began implementing his redevelopment plan eight years ago with the purchase of 42 parcels.
Located downtown on the edge of Calgary’s Beltline district, 17th Avenue boasts pubs, restaurants, nightclubs and more than 400 unique stores spanning between 2nd Street and 14th Street SW.
Arlington has concentrated on 17th Avenue between 4th Street and 8th Street, but Lonardelli dismisses the term high street familiar with baby boomers.
“It is now cool streets,” he corrected, “places where people want to work, live and play.”
Lonardelli, born and raised in Winnipeg, said the terminology reflects a new generation: Millennials and Gen-Xers who, he said, are now the driving force in Canada’s retail and residential sectors.
Calgary has the youngest population of major cities in Canada with a median age of 36, according to Statistics Canada.
Lonardelli and his team spent a lot of time talking to young Calgarians and his vision for 17th Avenue echoes what they heard: Millennials are increasingly “brand agnostic” consumers who care more about community than cars and place experiences over commitment, he explained.
Big brains at the University of Lethbridge, which recently used Calgary for a detailed Millennials real estate case study, came to the same conclusion.
“Young people are delaying the traditional milestones of adulthood such as marriage and childbearing, even buying a car, and instead are increasingly found in walkable, amenity-rich urban centres where they congregate in high-density housing in historically high concentrations,” the University of Lethbridge study Millennials in Calgary stated.
Lonardelli’s fundamental focus is mixed-use buildings that merge retail and residential, but his retail tenant mix is different than in other live-work-play districts.
“You won’t see an international or national brand,” Lonardelli said.
For example, when Starbucks moved out of one of Arlington’s premier 17th Avenue sites, Lonardelli replaced it “within five minutes” with Higher Ground, popular Calgary-based coffee shop that has just one other location in the city.
“We had 15 or 20 applications for that site and half of them were nationals, but we went with the local entrepreneur,” he said.
While most retail landlords would automatically lock-in the covenant of a big-brand, Lonardelli said the “developer’s curse” is building and tenanting retail space based on what the developer and its backers want, rather than what the customer desires.
“I never ask myself what I think will work, I ask my future customers what they want and then I find tenants to match that,” he said.
The unorthodox stance appears to be paying off.
All 13,000 square feet of retail space in under-construction The Fifth, Arlington’s current mixed-use project, has already been leased to seven tenants, each owned by local entrepreneurs. These include Amata Gelato, with its second location after 25 years in the city; Bro’s to Go, a hip breakfast diner; The Mash, a craft beer and craft pizza outlet; Nue Hospitality, a “curated” cocktail lounge; Burnin Bird a unique Nashville-themed chicken concept; Cinnaholic, a dietary- focused dessert café; and Calgary’s newest vegan restaurant.
Above the retail is four floors with 52 units of one- and two-bedroom stacked townhouses, capped with a private rooftop patio, and all equipped with state-of-the-art Telus smart-building technology. Rents range from $2.90 to $3.15 per square foot ($1,750 to $2,000 per month) and half of the units have been rented with zero tenant incentives, rather rare in the city.
Arlington expects to complete all seven of its 17th Avenue new builds – which will total 45,000 square feet of commercial space and 1,200 homes – over the next four to five years. All of the space is strata, which allows Arlington the future option of selling or leasing the homes or commercial units.
Lonardelli is nonplussed by Calgary’s high office vacancy rate, which most believe has a negative effect on downtown retail traffic.
He has a different take.
Lonardelli noted that Calgary’s downtown has a towering 43 million square feet of office space. Even with a near-30 per cent vacancy rate, the city still has 29 million square feet of offices fully leased, he explained.
This is more leased office space than in all the office towers of downtown Vancouver and more than in the cores of Edmonton, Regina, Saskatoon and Winnipeg, combined.
“Calgary simply has too much office space,” he said.