Retail CRE sector sees ‘spectacular rebound’ in Quebec | RENX

IMAGE: The largest sporting good store in Canada is located in the Laurier Quebec shopping center in Quebec City.  (Courtesy Ivanhoe Cambridge / Groupe Boucher)

The largest retail sporting goods store in Canada is located in the Laurier Quebec shopping center in Quebec City. (Courtesy Ivanhoe Cambridge / Groupe Boucher)

Consumer confidence and retail sales in Quebec are seeing a “spectacular rebound” and retail rents in Quebec City are poised to jump, says Dean Mendel, the founding partner of Forum Properties which specializes in shopping center development.

He was speaking about the changing face of the retail market during a session of the Quebec Real Estate Forum, held May 4. It was the first Quebec City forum since 2018.

Forum and Crofton Moore teamed up last December to buy the 529,000-square-foot Mega Center Sainte-Foy from Choice Properties REIT and OP Trust for $ 98.5 million.

Located at the intersection of Highways 40 and Duplessis, the power center includes tenants like Marshalls, Walmart, Dollarama and Cineplex Odeon and has a 93 per cent occupancy rate.

“We strongly believe that rents in Quebec City and Lévis will increase considerably in the years to come, because the gap in rents versus other big cities in Canada is much too big,” Mendel said.

Méga Center Sainte-Foy has solid tenants and secure cash flow, a strong demographic base and potential for redevelopment on its “immense” 2.6 million square foot site. The price tag was affordable, he added. “We paid less than $ 200 per square foot – far less than replacement cost.”

Forum plans more Quebec investment

Active in real estate development since 1988, Forum has a $ 1-billion portfolio that includes retail plazas in Canada, and both retail and big-box industrial in the US

Mendel says he anticipates Forum will become more active in the greater Quebec City region, given its stability and sustained population growth.

“For an investor, it is a bit less competitive than other Canadian cities,” he said. “We’d like to buy and develop many retail projects and lots of multiresidential rental projects.”

Bricks and mortar is alive and well and traffic has picked up significantly, added Martin Boucher, president of Groupe Boucher, which has 29 Sports Experts, Atmosphere, Entrepot du Hockey and Mathieu Performance stores in Eastern Quebec.

“Traffic has returned to almost 2019 levels and in some cases is better than 2019,” he noted.

Canada’s largest sporting goods store

Last October, Boucher opened the largest sporting goods store in Canada in Ivanhoe Cambridge’s Laurier Quebec in Quebec City, an 83,500-square-foot store in a space previously occupied by Sears. The opening was the biggest in Sport Chek and Sports Experts history in Canada in traffic and volume.

“I came across lots of people who said the store made no sense,” Boucher said. “For those who thought brick and mortar is dead, it’s far from being dead.”

Bricks and mortar will remain at the heart of retail, but customers want more choice and the omni-channel route “is definitely the way to go.”

Eighteen months ago, 71 per cent of Boucher’s clients went online before going to a store.

“You can not serve customers the same way,” he said. “Clients are much better informed and want to spend less time in stores. Clients arrive knowing the product well and are very rushed. It’s a significant challenge. ”

People in Quebec City now shop with the web, added Donald Larose, vice president, Quebec region at JLL. “They know what they want before they enter the store,” he agreed, noting less time is spent shopping than in 2019, but conversion rates are higher.

Boucher noted there is a trend toward neighborhood retail with local products and “shopping centers are well-positioned for this.”

The retail mantra: Adapt or die

Retailers are at a crossroads and will be swallowed up if they do not adapt. However, shopping center owners must provide more leadership, he said, decrying the fact there are stores that have not been renovated for 15 or 20 years, and stores where fitting rooms closed during the pandemic have yet to reopen.

He added he is in favor of public transit, but not in favor of Quebec’s proposed tramway development.

Many developers have expressed concern the tramway will make it harder for cars to access shopping centers on busy Laurier Blvd., the city’s major commercial artery. Current plans call for a sharing of the boulevard between cars, the tramway, pedestrians and cyclists. “We’re continuing to send the message to the authorities.”

François Lapierre, vice president, operations and marketing at Westcliff Management, said his company believes strongly in enclosed malls. The company’s assets include 22 shopping centers in Quebec.

As proof, Westcliff recently invested $ 30 million in a redevelopment of the 49-year-old Les Galeries Chagnon in Lévis, the largest shopping center on the South Shore of Quebec City.

“It does not bother us that shopping centers are not in favor with investors,” Lapierre said. “We believe in the shopping center model.”

However, shopping center owners have to think outside the box. In other markets, he noted, professional schools, municipal libraries and theaters are among the spaces the company is considering.

Regional shopping centers have a place, JLL’s Larose concurred.

“As we emerge from the pandemic, we see there’s starting to be demand for our commercial spaces. The interest is there; the traffic is there. ”

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