Some local retailers are underperforming because the city has an excess 2.5 million square feet – the equivalent of more than two Rideau Centres – of shopping space, according to a new study.
While there is potential for additional space in some retail goods categories, notably grocery stores, data shows there are hundreds of thousands of excess square feet in others, such as clothing merchants.
These stores may still be viable, but the surplus means roughly 18 per cent of Ottawa’s 13.7 million-square-foot retail portfolio are not reaching its sales potential, says study author John Blatherwick, principal of Geospace Research Associates.
But he says that could change, particularly for smaller stores. Most new construction consists of big-box stores or power centres filled by national retailers who can absorb any losses across their chain, in contrast to main-street merchants who are predominately local, he argues.
“As you add more retailers to the mix, with a fixed (household) disposable income, you’re looking at destructive competition,” says Mr. Blatherwick.
The results are based on Statistics Canada retail sales and household spending data. Calculated store sales per retail category are subtracted from probable household spending. That dollar figure is then divided by the average sales per square foot for each category to calculate the potential for additional retail space or surplus for each category.
The citywide figures are part of larger retail study Mr. Blatherwick is undertaking for the Preston Street BIA.
He suggests Ottawa should follow the lead of municipalities in the United Kingdom, where developers are required to complete a retail impact assessment prior to securing construction permits.
“As a proponent, you have to prove your retail proposal will not adversely impact the vitality and vibrancy of that particular main street,” he says.
“It should be a requirement (to) … prove that there is an actual need for the number of square feet that you are intending on building.”
Mr. Blatherwick says some neighbourhoods can support additional retail space in certain merchant categories, depending on household disposable income levels and the number of existing stores.
Several consultants have come to differing conclusions as to whether the Glebe can absorb the additional retail space being proposed as part of the redevelopment of Lansdowne Park.
Most recently, a peer review by Malone Given Parsons presented to council earlier this week endorsed an earlier study that found up to 360,000 square feet of retail and commercial space could be supported in the Lansdowne redevelopment.
Mr. Blatherwick says he is inclined to support the position of consultancy J.C. Williams, which was hired by the city and recommended a food-centric retail mix at Lansdowne, including grocery and specialty food stores.
Across Ottawa, retail sales are expected to hit $12.3 billion this year, the same as in 2008, after dipping to $12 billion last year, according to a report by market research firm Kubas Consultants.
Top retail goods categories with potential for additional space
Grocery store/supermarkets (310,000 square feet)
Gas stations (78,450 square feet)
Used vehicles, RV and parts dealers (20,465 square feet)
Top retail goods categories with excess space
Clothing stores (784,700 square feet)
Sporting goods, hobby, music and book stores (760,550 square feet)
Furniture stores (236,750 square feet)
Source: Geospace Research Associates