Downtown vacancies fall to 4.7% in the first half of 2022 | CBRE
In-person contact fuels Vancouver’s retail revival as sanctions lift
Peter Mitham
Western Investor
Diversified neighbourhoods, such as West 4th Avenue, faring the best as retail reboots
Huge crowds returned to West Fourth Avenue, Vancouver, for the 2022 Khatsalano street party July 9.|Facebook/Khatsalano
Retail vacancies in Vancouver are falling as consumers return to in-person shopping, with services leading the way.
Downtown vacancies fell to 4.7 per cent in the first half of 2022, according to CBRE Ltd., down from a pandemic peak of 6.2 per cent a year earlier.
“These last six months have seemed to be the most optimistic and active months that I’ve seen in the last three years for retail leasing,” said Adrian Beruschi, senior vice-president with CBRE. “People are shopping again. People like to shop, they like to be out of their house.”
While plenty of lease signs remain both downtown and across the region, Beruschi said activity on retail space has increased as the economy has normalized.
A report from RBC Economics last month noted that momentum in the service sector was increasing across Canada, and that’s definitely been playing out in B.C.
Beruschi said spending has shifted from goods, easily ordered online during the pandemic, back to services, which is largely dependent on in-person transactions. This is in turn driving the kind of tenants seeking space, from quick-service restaurants to personal services.
“We’re seeing a lot more service retail where you need to visit,” he said. “Dental offices, medical offices, hair salons, tattoo parlours, tattoo-removal parlours.”
Clothing sales have exploded, according to RBC, as restaurants and entertainment venues reopened, rising from parity with February 2020 levels in May to 40 per cent to 50 per cent higher this summer.
“Online shopping will continue to thrive and grow, but I think people are still going to want to get out of the house, try stuff on, and walk around and grab a coffee,” Beruschi said.
This has driven the fortunes of diversified strips like West 4th Avenue in Kitsilano, home to a mix of popular restaurants, local boutiques, and national brands with more coming. Arc’teryx is moving to a new flagship location in the neighbourhood, and Adidas is also scheduled to open its doors this fall.
The West 4th Avenue stroll hosted huge crowds for the Khatsalano street party this July 9 after a two-year pandemic hiatus.
“I would say 4th Avenue has been the golden child, the poster boy, of Vancouver retail leasing. It’s got thriving local boutiques, it’s got restaurants with lineups outside the front, and it’s got international brands and big local brands like Arc’teryx,” Beruschi said. “It’s firing on all cylinders in a really positive way.”
Two challenges face the retail sector, though.
One, it’s incredibly hard to get stores open thanks to a combination of municipal processing backlogs, particularly in Vancouver, supply chain issues and construction delays. Many units are leased but they’re still shuttered as a result.
“Between municipal process, construction delays, supply chains for equipment, getting stores physically open has probably never been more challenging,” Beruschi said.
Second, areas like downtown have yet to see traffic recover to pre-pandemic levels.
“The central business district will thrive once people are back in the office a little more regularly,” he said. “I think that will come in September, once this stretch of spectacular weather subsides and kids are back in school and people are back to their more typical routine.”
Coffee shops and other venues that depend on office workers will benefit the most, with summer tourist traffic showing what’s possible.
“I’m standing here on Hastings and Burrard and it doesn’t feel any different than it did four years ago,” Beruschi said. “People are walking, there’s tourists pulling their luggage, there’s a little bit of road rage happening on illegal turns.”
While specific neighbourhoods and segments of the retail environment will face challenges, the numbers point to stable and even rising lease rates in popular areas like West 4th.
“Retail’s in a really positive spot,” he said. “There’s a lot of challenges, but I think we’ll see a lot of entrepreneurial spirit from the retail segment moving forward.”
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