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MEGA-DEBUT

Mills Corp.’s first project north of border, Vaughan Mills, opens in November

BY SUSAN THORNE

Canada has not seen a single new regional mall go up since 1990, observers note. But that dry spell will end with the Nov. 4 opening of Vaughan Mills, a joint venture of The Mills Corp. and Montréal-based Ivanhoe Cambridge.

The long-awaited launch of this C$355 million ($267 million), 1.2 million-square-foot center in the Toronto suburbs will introduce Canadians to the Mills combination of entertainment with discount and specialty retail. Meanwhile, its development in that location taps into a burst of growth on Greater Toronto’s northern periphery.

Its mix of Canadian, U.S. and non-North American retailers includes the first stores ever in Canada for Bass Pro Shops, Benetton Outlet and Burlington Coat Factory. Among the others are The Children’s Place Outlet, H&M, Linens ’n Things, La Senza and Tommy Hilfiger, all of which are occupying premises of 20,000 square feet or larger, and about 200 specialty retailers. Representing the entertainment side are Canada’s first Lucky Strike Lanes bowling lanes and a two-tiered indoor-outdoor NASCAR go-cart facility.

“This opens up a whole new country to us,” said Julie Wilsey, Mills’ development director. Vaughan is Canada’s fastest-growing municipality, Wilsey notes, and the primary catchment area’s population exceeds 4 million — considerably more than that of such U.S. Mills centers as Ontario (Calif.) Mills or Sawgrass Mills, Sunrise, Fla. Nearly one-quarter of Canada’s population lives within 60 miles of Vaughan Mills, and that’s to say nothing of the U.S. shoppers from New York state and the Midwest that the developers expect will come, Wilsey says. She projects annual sales of about C$500 million.

The Mills emphasis on outlet and off-price retail is well suited to the Canadian consumer, asserts Paul W. Gleeson, vice president of development at Ivanhoe Cambridge. “This is a strong middle-income country,” he said. “The upper-income market is very limited in Canada, so a value orientation will be very well received.”

Vaughan Mills occupies a single-story structure with a racetrack configuration surrounding a 1,000-seat food court. Individual color schemes and materials distinguish the center’s seven retail “neighborhoods,” as determined by the various merchandise categories — fashion, entertainment and the like. An overall decor theme titled “Discover Ontario” evokes familiar geographical and cultural elements, including wildlife, farming and lakeside cottages, and uses leaf and wave motifs and other decorative features, such as the canoe and the stone fireplace found in one seating area.

Vaughan Mills steadily approaches completion, but it has taken considerable time for this super-regional mall, originally slated for a 2001 opening, to come together.

The project was delayed at the planning stage in 1997-’98 by negotiations with surrounding landowners and retail developers, including Omers Realty Corp. and Cadillac Fairview Corp., both of which appealed to the government concerning the project’s possible adverse effects on existing centers.

U.S. retailers were central to the leasing strategy when the project was announced in 1999, but attracting them proved to be difficult after the economy soured, Gleeson recalls. All the original U.S. anchor tenants, Bed Bath & Beyond and BCBG among them, abandoned their commitments. Meanwhile, a competing retail district sprang up at the intersection of highways 400 and 7, three miles south of Vaughan Mills, with a Wal-Mart and a Costco, as well as the RioCan Colossus Centre, a power center occupying 7 square kilometers (3 square miles). Locating to this other area were Ikea, which once planned to build a store on a site next to Vaughan Mills, and AMC, a frequent Mills tenant that was expanding into Canada in the early 1990s.

As a result, non-U.S. tenants have a much greater role at Vaughan Mills than first planned, with Canadian names taking up nearly half the retailing space. But this is no bad thing, company officials say. Though Canada has no tradition of outlet retailing, numerous retail players have been broadening their offerings over the past five years to include larger formats and off-price concepts. Non-U.S. retailers include Aldo, Danier Leather and Mexx, all of which have outlet stores at Vaughan Mills, and the new Hudson’s Bay home goods concept, Designer Depot, which occupies 40,000 square feet.

The center has now achieved a typical Mills mix of 55 percent outlet retailers. Twelve of 16 anchor spaces are occupied, and Gleeson expects the small-store space to be 85 percent leased on opening day — a standard level for a new Mills center, he says.

The mall will help satisfy a demand for new shopping centers in the region, according to Dr. Ken Jones, director of the Centre for the Study of Commercial Activity at Ryerson University, Toronto. “For some time we haven’t had the choice of a new shopping center in the [Greater Toronto area] — a real shopping center, as opposed to a power center,” Jones said. The Mills emphasis on entertainment as part of the mall environment provides choice as well, Jones notes, predicting that Vaughan Mills will prosper. “It’s new, it’s big, and it’s potentially exciting.”

John C. Williams, senior partner at the J.C. Williams Group, a Toronto retail consulting firm, thinks so too. “This is the right new mall in the right place,” he said. One retailer that will enjoy immediate rapport with Canadians is Bass Pro, Williams says. “They’re awesome; I counted something like 2,600 types of fishing reels in their store in Chicago, and it’s fun to visit even if you’re not an outdoors person,” he said. “I think Bass Pro will have great drawing power, as an anchor and as part of the experience value of the mall.”

The Algonquin lodge-style facade of the 130,000-square-foot Bass Pro store and an adjacent fishing pond are visible from Highway 400, the primary north-south route to cottage country from Toronto. In Canada Bass Pro faces competition from such purveyors of outdoor goods as Canadian Tire, Mountain Co-op and Wal-Mart.

“But nobody really offers the same total concept that we have,” said Larry Whiteley, manager of corporate public relations at Springfield, Mo.-based Bass Pro.

Another vote of confidence comes from Christian Bagnoud, director of marketing and public relations at Toronto-based H&M Canada, whose 17,000-square-foot Vaughan Mills unit is one of four Canadian rollouts planned for this fall. H&M only opens stores in downtown ‘A’ locations or in the best malls, he says. The Mills name along with the area’s demographic strength drew H&M to Vaughan Mills. “We were really satisfied with the concept of an American type of shopping mall that is new in Canada,” Bagnoud said. “We wanted to be part of something new.”

Gleeson says he believes that the Vaughan Mills tenant mix meets the developers’ original expectations. He predicts that the new mall will outperform Mills centers in the United States in terms of traffic and sales. “I think we’ve got the makings not just of a home run, but a grand slam,” he said.

If Vaughan Mills does turn out to be a grand slam, there could be other Mills centers going up in Canada. Indeed, Ivanhoe Cambridge and Mills have an exclusive agreement to develop as many as four such malls nationwide.