Hey there, time traveller!

This article was published 22/6/2015 (1918 days ago), so information in it may no longer be current.

Winnipeg's overall retail vacancy rate has climbed to its highest level in more than a dozen years in the wake of a rash of store closings and downsizings earlier in the year.

Industry officials had predicted in April the rate would jump above five per cent in the aftermath of a retail shakeup earlier this year that included the closure of all 133 Target department stores in Canada and the shuttering of 66 Future Shop home-electronics stores.

A number of other national retail chains, including Mexx Canada, Smart Set, Jacob, Sony Canada, and Jones New York had also announced plans to close stores or revamp their bricks-and-mortar operations.

So it was no surprise when Winnipeg Realtor Wayne Johnson's recently completed, mid-year commercial real estate market survey showed the overall vacancy rate had jumped to 5.7 per cent as of June 1 from 4.4 per cent at the end of 2014.

"I think everybody had the sense it was going up," the Royal LePage Dynamic Real Estate agent said.

Johnson said he expects the overall rate to level off now, then gradually start to improve as some of the vacant space gets backfilled with other tenants.

John Prall, a retail leasing specialist with the Winnipeg office of Colliers International, also expects vacancy rates to stabilize in two key segments of the market -- regional shopping malls and neighbourhood shopping malls. But the third segment -- the retail power centres -- could see vacancy rates continue to rise because they were the hardest-hit by the spate of store closings, he said, so it will take longer for them to rebound.

Prall said there also are concerns the market upheaval might not be over. He noted Gap Inc. announced last week it would be closing 175 of its namesake stores in North America, although it didn't disclose which ones.

An even bigger issue is how many retail chains will decide that, with online sales accounting for a growing share of their overall revenues, they don't need such big bricks-and-mortar stores.

"The bigger shift, I think, in the power centres is going to be a lot of retailers downsizing their footprint. That's the real trend that the development market is watching and has some concerns on," he said. "And the question then is can the landlord accommodate that (smaller) size...?"

Prall said if the landlord can't, the tenant may opt to relocate to another retail development that can accommodate him.

"So you could see more shifting of space happening this year and likely into next year," he said. "This isn't a sky-is-falling issue. But I do think that in the years to come, many retailers in certain categories may rethink what their (store) model needs to be."

In its Spring 2015 Retail Report released last Thursday, Colliers International said online sales in Canada grew by 15 per cent in 2014, while total retail sales grew by a more modest 4.6 per cent to $505.4 billion.

The report said Manitoba's retail sales grew by 3.9 per cent to just under $18 billion, which was the fifth-biggest percentage gain among the provinces.

And in the first three months of 2015, Manitoba was one of only four provinces to post a year-over-year increase in sales, said David Bell, the company's senior consultant for planning and retail consulting.

Bell said it was modest growth -- only 0.8 per cent -- but it's still pretty good given what happened in most of the other provinces.

"In the last few years, it's been that steady-as-you-go... scenario, which is not a bad way to be," he said.

Prall and Johnson said it's encouraging to see new tenants have already been found for two of the four Winnipeg Target stores. Canadian Tire snapped up the one in the Grant Park Shopping Centre, while Walmart grabbed the one in the Southdale Centre.

"It's a good example of retailers taking advantage of infill opportunities between existing, successful stores, at an economical rent," Prall said. "That's the positive story. It has allowed some of these guys that might not have otherwise built in those areas to take advantage of those things."

He and Johnson predicted it also won't take long to backfill the remaining two Target stores in the Kildonan Place Shopping Centre and the Plaza at Polo Park development.

Prall said it's encouraging to see new retailers such as Lego and Mastermind Toys entering the Winnipeg market.

"By the end of the year, I think we will hear of a few other new entrants into our market that will be notable," he said.





Know of any newsworthy or interesting trends or developments in the local office, retail or industrial real estate sectors? Let real estate reporter Murray McNeill know at the email address below, or at 204-697-7254.

murray.mcneill@freepress.mb.ca