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Shopping Centers Today -> January 2001
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Superpower
Canada's largest power center comes to Alberta
By Susan Thorne
Alberta, like Texas, is famous for cowboys and oil men, and Edmonton, the capital, appears to share the Lone Star State's tendency to think big. At least when it comes to shopping centers, anyway.
Already home to the world's largest enclosed shopping center, the West Edmonton Mall, the city can now claim another landmark: South Edmonton Common (SEC), which will be Canada's biggest power center when it is completed this summer.
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And speculation is that highly favorable market conditions and timing could hand this project large-scale success, too. SEC is projected to have 2.3 million square feet of gross leasable area (GLA) on buildout; it is jointly owned by Edmonton-based Cameron Corp. and Grosvenor Canada Ltd., a subsidiary of British property investor Grosvenor International, whichpurchased a 50% interest last year.
Already open and operating is 680,000 square feet of retail space, including The Home Depot (136,900 square feet) which was the first tenant in 1998, Wal-Mart (130,000 square feet), the grocery chain Real Canadian Superstore (145,000 square feet) and a Cineplex Odeon 16-screen megaplex.
Pier 1, Golf Town, East Side Mario's and Indigo Books (the Toronto-based large-format book retailer) have opened their first Edmonton stores here. Other retailers under 100,000 square feet include London Drugs, Michael's Craft Store, Canadian Tire PartSource, Mark's Work Wearhouse and Staples.
Although Edmonton (population 940,000) has five other power centers of 200,000 square feet or more, none approaches SEC's planned retail footage; the next-biggest is the 34-store Mayfield Common at 475,364 square feet of GLA. (There are also 10 enclosed shopping centers besides the West Edmonton Mall with 400,000 square feet or more).
The landmark size of the center and its tenant roster are key selling points, according to Tony Rota, director of marketing for Cameron Corp. "There's nothing on this scale, and that's perked up a lot of interest," he said.
"We have a lot of inquiries from national retailers—at least one or two per week—wanting to open their first Edmonton or Western stores here.
"There's definitely a synergy: Strong retailers want to be near other strong retailers," he added.
The time is also ripe for big-box expansion, as U.S. companies like Michael's increasingly roll out their concepts in Canada.
The center is rapidly expanding to fill two quarter sections of flat prairie at the southern fringe of the city, on former railroad land now becoming surrounded by fast-growing suburbs.
Edmonton is flourishing economically these days because of near-record oil and natural gas prices: It has the second-largest gross domestic product (GDP) among major Canadian cities plus expected economic growth of 4.6% for 2000, according to figures from the Conference Board of Canada, an Ottawa-based not-for-profit private research institute.
The same source forecasts a total of C$10.3 billion in retail sales for 2000, placing Edmonton second only to Toronto in sales growth. Edmonton's per capita retail spending is 20% higher than the Canadian average (C$9,956 compared with C$8,280), according to statistics from Economic Development Edmonton.
Corrie L. Brauer, a member of the retail group of CB Richard Ellis, Edmonton, pointed out that the cost of living is low in Edmonton, making disposable income higher than in other parts of the country.
The trade area to the south and southwest of the Edmonton core (where SEC is located) has the highest household income and highest residential growth in Edmonton, Brauer said.
SEC has the further advantage of being adjacent to the Anthony Henday ring road, a major transportation artery being constructed over the next five years.
The Alberta capital has had more growth in its suburbs compared with its downtown in recent years, in part because of the strong outward pull of the West Edmonton Mall.
Brauer said the situation in the city center worsened with the closing in 1999 of the local Eaton's, which was not selected to be one of the new Sears-owned Eatons stores; a lack of confidence stemming from this has contributed to a retail vacancy rate of nearly 28% in the central business district. By contrast, the southern part of the Edmonton area has much higher demand for retail, with a vacancy rate of 2.9%, compared with a citywide rate of 6.2%.
David Young, a vice president and Edmonton manager for CB Richard Ellis, said he feels that SEC is in a strong position overall: "First because of its sheer size; then because of the large generators [anchors], which help bring in the 10,000-square-foot retailers; and there's the cinema and restaurants to attract evening trade."
A&W is one of many stores in South Edmonton Common, Canada's largest power center.
The center benefits from a mix of price points, with upmarket stores like Indigo and Pier 1 as well as price-sensitive retailers like Real Canadian Superstore and The Brick, a furniture retailer.
The fashion element is also represented with apparel retailers such as Addition-Elle (large-size women's wear), Jacob Annexe and Cotton Ginny, among others, which occupy the Shops at South Edmonton Common.
While the immediate vicinity is important, SEC's trade area extends well beyond the city limits because Edmonton is the regional shopping destination for most of northern Alberta, including Red Deer and Leduc to the south of the center.
Doug Fogg, associate vice president with Colliers International, Edmonton, noted that power centers offer a good shopping format for a day's outing for out-of-towners, many of whom arrive by car.
"It's easy—it's one-stop shopping," he said. "You can pull into South Edmonton Common and go to Indigo and the Superstore, grab a bite to eat, see a movie, pick up your golf clubs, stop at Home Depot, and then go home!" Fogg said he feels that some of the center's unique retail offerings such as Pier 1 enhance its appeal for these shoppers from rural communities. "This [center] will take all the new growth for the south side for the next three to four years," he predicted.
In the past, Alberta has often suffered from boom-or-bust dependency on its natural resources, but Young pointed out that there is more economic diversity than before; only 21% of the province's GDP is now attributable to oil and gas, compared with 40% in the mid-1980s.
This stability should help to keep shoppers coming to SEC and other local malls in years to come.
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