Opinion: Heady days for Ottawa’s retail market

Business is booming at two of Ottawa’s biggest regional shopping malls – the Rideau Centre and Bayshore Shopping Centre – and the city’s retailers generally had a pretty good year overall in 2015.

Collectively, Ottawa’s retail outlets saw growth of at least three per cent in revenue last year. This helps to explain why the city’s retail footprint continues to expand despite the spectacular failure a year ago of the U.S.-based Target discount chain, which closed all its Canadian stores.

The fallout continues from Target’s unceremonious exit from the Canadian retail scene, which left hundreds of thousands of square feet of empty commercial space at five Ottawa locations. These locations included one at Bayshore, where space was being prepared for a Target store when the chain pulled out of Canada.

The highly successful Walmart discount chain has since moved into this space at Bayshore while at the same time closing its store at the nearby Lincoln Fields Shopping Centre – a heavy blow to residents of that immediate area.

Walmart has also moved into the space vacated by Target at Billings Bridge Plaza. That leaves three former Target locations unoccupied at Hazeldean, St. Laurent and Place d’Orleans shopping centres.

Despite the failure of Target, 2015 was a good year generally for Ottawa’s retailers, according to Barry Nabatian, a longtime professional observer of the city’s retail scene. He is director of market research for Shore-Tanner & Associates, a firm of real estate appraisers and consultants.

Retail spending in Ottawa increased by an estimated $700 million last year, Mr. Nabatian said. Among the biggest gainers, he said, were Costco, which gets part of its revenue from an annual membership fee, and the Winners chain of discount clothing stores.

The Rideau Centre and Bayshore Shopping Centre, both of which have recently been massively expanded and modernized, have maintained their pre-eminent position in the local retail scene.

The latest figures available to Mr. Nabatian show the Rideau Centre’s annual sales running at about $1,100 per square foot, ranking it in the top 10 malls in Canada in that category. Over at Bayshore, the figure is about $700 per square foot.

These are challenging times for retailers, Mr. Nabatian said, because the purchasing power of the middle class is shrinking and many poor people are getting poorer. Some retail segments are being hit particularly hard, he said, such as restaurants.

Why, then, has there been an overall increase in retail spending?

Mr. Nabatian said several factors are at play. Ottawans are travelling less and spending less in the United States due to the weakness of the Canadian dollar and are opting to spend that money at home instead. In addition, tourists from other parts of Canada who might have headed south are visiting Ottawa instead. At the same time, the number of American visitors to the National Capital Region sharply increased last year.

Ottawa’s buoyant retail market has prompted developers to add about 1.5 million square feet of retail space in the past 18 months, according to Mr. Nabatian. About 500,000 square feet will be added this year, he says.

“It’s a matter of supply and demand,” he said. “Inside the Greenbelt, there is a surplus of retail space. Outside the Greenbelt in Orleans, Barrhaven and Kanata, there is still not enough. Population growth there is very high. That’s where the need is.”

Michael Prentice is OBJ’s columnist on retail and consumer issues. He can be contacted at news@obj.ca.