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Shopping Centers Today -> January 2001
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Canadian comeback
Retail sales revival fuels wave of shopping center renovation
By Susan Thorne
Although Canada hasn't seen any major new regional malls in the past decade, many existing ones are looking new today, thanks to the widespread rush to renovate that is sweeping the shopping center industry.
 The overhaul of Calgary's Chinook Centre is creating a 1.2 million-square-foot showpiece, which features Canada's largest food court. |
After the early 1990s recession, the revival of retail sales has made reinvestment in shopping centers more attractive, while competition from power centers is motivating traditional malls to spruce up. With regional centers consolidating their positions, renovation and redevelopment have become important tools for creating novelty and excitement in shopping.
The three-phase $300 million renovation of Calgary's Chinook Centre, to be completed this spring, is one example of the kind of dramatic lengths to which developers are going. Forty years old last year and with a tired retail complement, including one anchorless wing, Chinook Centre represented great potential because of its location at a prime downtown Calgary traffic junction.
The near-total overhaul is creating a 1.2 million-square-foot showpiece with an Alberta regional flavor and curving Art Deco-influenced design features.
A 20-foot Albertosaurus dinosaur sculpture stands in the atrium, and themed zones—fashion, lifestyle and family—with distinct decor and color schemes give greater shopping convenience. A 900-seat, second-story food court (Canada's largest) offers the most popular ethnic food possibilities. The mall makes lavish use of artwork and decoration such as hanging models of vintage airplanes and a time capsule with objects representing Alberta life.
Radical
redevelopment
Chinook Centre is not merely undergoing renovation; like many malls,
it is being radically redeveloped, remerchandised, repositioned and enlarged.
Center Manager Terry Napper said the new retail mix is more upscale than
the previous lineup, and roughly half the tenants are either flagship
stores of their companies or retailers unique to the city, such as the
XXXY and MEXX outlets and a Gap Body Shop.
 Chinook Centre's food court. |
The mall is going from 300 stores (only five remain unchanged) to a final total of 220, but the total floor area is larger than before. In other words, average rental premises are bigger: A 10,000-square-foot Club Monaco and 22,000-square-foot Gap are among larger format retailers that have been added. The center is anchored by Sears, Zellers and The Bay.
Chinook Centre's repositioning includes a stronger entertainment element in the enhanced interior, art and attractions, Napper said, and also features tenants who contribute a sense of relaxation and fun, such as the 22,000-unit Chapters book superstore, HMV Records, a Lammles Western Wear store, the food court and seven in-line restaurants. A 90,000-square-foot Famous Players 16-screen megaplex plus IMAX theater also adds leisure enjoyment.
Chinook Centre is typical of today's renovations in its greater attention to design and entertainment, said Montréal retail designer Denis Gervais of Gervais Harding Associates (GHA), design consultants for the Chinook project.
But shopping centers also want a more individualistic look that expresses the local or regional community, he said, pointing to Chinook Centre, which "couldn't be anywhere but Calgary," and Sunnyside Mall in Halifax, which GHA interpreted with a modern maritime theme.
Exterior appearance and design are also more important in current mall redesign, Gervais said: "It's no longer acceptable to have just a brick box." The refurbished Chinook Centre has a more inviting exterior with several retailers facing outward as well as inward to create an exterior "streetscape" effect. Napper sees this as providing free advertising to all the cars driving by on McLeod Trail. But Gervais noted that having two entrances creates costs and other challenges for retailers, who may need to have two cashier counters and adjust areas like the stockroom which are typically at the back of a store.
"Finding retail tenants who can afford two entrances and animate their exteriors can be a challenge, too," Gervais added.
Recouping
after Eaton's demise
Some malls, like the Eaton Centre, Toronto, use the alternative approach
of lining their external walls with outward-facing smaller shops or restaurants,
or using exterior surfaces for electronic billboards and other advertising.
The 1999 demise of Eaton's made redevelopment a necessity at several of Canada's regional malls, and Toronto-based Cadillac Fairview Corp. was particularly hard-hit, with 4 million square feet of space to recycle as a result. Some of the stores have been changed to The Bay or new Sears-owned Eatons department stores, but other space was converted for big-box retailers. That conversion has turned out to be a much more lucrative proposition than the previous arrangement, said Cadillac Fairview Vice President of Development Tom Smith.
"The rents on the space are much higher than with Eaton's," he observed. Furthermore, he said the supply of new space has made it possible to revitalize the retail mix by bringing in U.S. tenants—often new to their market areas—such as Old Navy, Winners Home Goods, Linens 'n Things, Pottery Barn and Williams-Sonoma.
Cadillac Fairview has an estimated 70 major shopping center refits recently completed or in the pipeline, which raises the question of the role of pension fund investment in the renovation boom. Cadillac and Canada's other leading regional mall developer, Toronto-based Cambridge Shopping Centres Ltd., are now controlled by deep-pocketed public pension funds that have the ready capital and willingness to reinvest in current mall stock. Smith said his company has always had a strong cash position and made it a priority to maintain standards, but he concedes that with pension fund ownership, "we're no longer focused on that quarterly report. Instead, we are focused on the long term and our main shareholder—the owner."
Renovation can definitely have a positive effect on the bottom line. Seymour Obront, CEO of Toronto-based Snowcap Investments, and ICSC Canadian vice president, said a 20% sales increase for the year following store renovation is a realistic expectation. Chinook Centre's Napper reported that sales volume for ancillary tenants at his center has doubled to C$300 million, and sales per square foot, which averaged less than C$450 per year before the renovations, were pushing past C$600 for the first 10 months of 2000. The food court is on track to break C$2,000 per square foot, he noted.
"It's way beyond what we as a management team expected," he said.
Cadillac Fairview's Smith says interior renovation alone is generally not enough to boost revenues—that comes from adding new retail space or creating new possibilities for advertising revenue. His company has done both at the Toronto Eaton Centre with new gross leasable area and leasable wall space for tenants' ads on the exterior.
In retailing and shopping center development, Canada often follows the trends rather than making them, but the recent mall renovations may be setting new standards.
"We've even had comments from some U.S. firms that some of our nontraditional approaches are ahead of them!" Smith recounted proudly.
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