{"id":10447,"date":"2023-09-21T03:53:01","date_gmt":"2023-09-21T03:53:01","guid":{"rendered":"https:\/\/dmsretail.com\/RetailNews\/calgarys-retail-space-crunch-drives-surge-in-rental-rates-and-demand-report\/"},"modified":"2023-09-21T03:53:01","modified_gmt":"2023-09-21T03:53:01","slug":"calgarys-retail-space-crunch-drives-surge-in-rental-rates-and-demand-report","status":"publish","type":"post","link":"https:\/\/dmsretail.com\/RetailNews\/calgarys-retail-space-crunch-drives-surge-in-rental-rates-and-demand-report\/","title":{"rendered":"Calgary’s Retail Space Crunch Drives Surge in Rental Rates and Demand [Report]"},"content":{"rendered":"

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A tightening of supply for retail space in Calgary is leading to jumps in demand and rental rates at existing centres, according to a mid-year market report by commercial real estate firm CBRE.<\/p>\n

The report said Calgary\u2019s overall retail vacancy rate has risen by 10 basis points to six per cent, half-over-half, as the year started with headwinds with the prime lending rate now at its highest in over two decades.\u00a0<\/p>\n

CBRE said asking rents have appreciated in response to a combination of demand, limited supply, and elevated construction costs. Suburban communities and neighbourhood centres continue to see exceptional demand, and for mixed-use noticeably less.<\/p>\n

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Image: City of Calgary<\/figcaption><\/figure>\n
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John Moss<\/figcaption><\/figure>\n<\/div>\n

John Moss, Senior Vice President of CBRE in Calgary, described the city\u2019s retail market as \u201crobust\u201d despite some economic challenges.<\/p>\n

The market is being buoyed by residential growth, the city\u2019s vibrancy and the stability of retail.\u00a0<\/p>\n

\u201cThere\u2019s still some headwinds from retailers that exist,\u201d said Moss. \u201cBut what is great is the momentum of the city and the momentum of our market is outweighing any of the challenges. So it\u2019s still making the retail activity quite strong.<\/p>\n

\u201cCalgary has always done exceptionally well and I would say it\u2019s almost insulated somewhat compared to the rest of Canada because we have the highest disposable income. We have the highest disposable spending. That\u2019s what props us up exceptionally well.\u201d<\/p>\n

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CBRE Calgary Retail Figures H1 2023<\/figcaption><\/figure>\n

Moss said the market will be interesting to watch in the future. First there are a number of businesses that received federal government loans to help them through COVID and repayment is coming up for them.\u00a0<\/p>\n

\u201cI\u2019m curious to see what\u2019s going to happen in Q1 of next year once those loans start having to be paid,\u201d he said.\u00a0<\/p>\n

\u201cBut the other thing that is going to put upward pressure on our market is landlords are really reconsidering where we are in the business cycle from a retail standpoint. Construction costs are going through the roof and it\u2019s putting pressure on the net rents that landlords have to get. So what\u2019s happening is some landlords are starting to stall on their projects and tenants are then having to capitalize or take advantage of pre-existing inventory.\u00a0<\/p>\n

\u201cThat\u2019s been good because we\u2019ve had some vacancies over the course of COVID. So it\u2019s naturally absorbing all of those spaces that might not have had the same interest. That\u2019s a great thing. We\u2019re starting to see absorption of pre-existing inventory because construction is slowing down for new product.\u201d<\/p>\n

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