Empty storefronts pockmarking Vancouver strolls such as Robson Street, Denman Street and south Main Street are due to a mix of higher rents, development pressures and store owners following their customers to the suburbs, analysts say. Small retailers are the most affected.
Craig Patterson, editor of Retail Insider, who has been consulting with the City of Vancouver on the issue, pointed to the 1100 block of Robson, parts of Denman Street and the Punjabi market area around Main Street and East 49th Avenue as retail areas that are struggling.
“Certain areas of Vancouver are hollowing out,” Patterson said.
On Denman and Robson, he suggested, it is due to higher rents, some of which is tied to rezoning potential.
“Some landlords don’t want to lower [retail] rents because it reduces the value of their building,” he said. “They would rather leave [storefronts] empty.”
Retail lease rates on Robson Street range from $120 to $250 per square foot, second highest in the city behind Alberni Street, according to a recent survey by Cushman & Wakefield.
A second-quarter 2018 study by commercial realtor Marcus & Millchap showed the average price of a retail property sold in Vancouver this year was in excess of $1,000 per square foot, up 25 per cent from 2017. Average retail rents now average $30.10 per square foot, up nearly 10 per cent from 2017, the agency added.
On south Main Street, the increasing number of vacancies is due to retailers following their customers to the Fraser Valley, Patterson said.
Commercial real estate agencies suggest the current vacancies could be a localized, short-term cycle. They note that Metro Vancouver retail spending in May, the latest figures available, reached $3.4 billion, up 5.4 per cent from May 2017 – the second-highest annual increase among major Canadian cities. Vancouver’s retail vacancy rate is 1.7 per cent, and it is 2.5 per cent downtown, both among the lowest in the country.
“Despite all the doom and gloom surrounding mid-level retail stores closing, both high-end and low-end retail, as well as food-service locations, continue to perform well,” noted Andrea Welburn, manager of information and research for Cushman & Wakefield in Vancouver.