August 23, 2012
PAUL BEREZOWSKY, CAMERON DEVELOPMENT CORPORATION
Edmonton retail space construction booms
Edmonton has often grabbed headlines for its retail chutzpah. Think back to 1981 when the largest mall in North America — West Edmonton Mall — opened for business.
That super mall still may be king of the continent but this year Edmonton (the country’s retail capital) is in the news for another reason: more than 3.2 million square feet of retail is under construction, 2.5 square million of which will open this year.
To put that number in perspective, it nearly equals all of the retail construction across Canada in any one of the past few years, says Eric Slatter, senior associate, retail, Colliers International, Edmonton.
While retail development has gone cold in most Canadian cities, that is not the case in Edmonton this year.
The development boom there is led by big box centres such as the Currents at Windermere in southwest Edmonton. About 700,000 square feet of the 1.1 million square foot power centre has been completed, says Cameron Naqvi, executive vice-president, Cameron Development Corporation.
The developer is a major player in the retail market in Alberta’s capital city, with a dozen retail developments on the go. Another of its biggest is Manning Town Centre, an 800,000 square foot big box centre.
The retail boom, however, is showing cracks.
“In the last couple of months we have started to see shortages of labor, and material costs have certainly gone up,” says Naqvi.
Slatter hears similar comments from other developers.
“They tell us that they continually have to revise their construction budgets because costs keep going up.”
Naqvi says three well-known general contractors in Edmonton declined to bid on a sizable contract tendered by Cameron recently because they were overcapacity.
“It is the first time since 2007 that we have seen this.”
Unemployment in Edmonton hovers at 4.5 per cent, well below the Canadian average, says Slatter.
“What we’re starting to see on construction sites are signs — one telling you what is being developed, another saying who is doing the job and another ‘now hiring’ sign because there is such a huge demand for trades and labour.”
Rising materials prices such as steel and a scarcity of piling rigs are resulting from high demand as well in other sectors such as oil and gas, adds Naqvi.
PAUL BEREZOWSKY, CAMERON DEVELOPMENT CORPORATION
But he believes that builders have learned a hard lesson from the hectic pace of 2007 when costs skyrocketed and labor was scarce. “I think everybody (builders) is being a little more cautious in what they take on now.”
Does that mean projects will be shelved?
“Possibly,” he says. “We have to be a little more strategic about when we go to tender.”
Slatter says the city’s retail vacancy rate is a low 2.4 per cent and retail sales remain high, compared to the rest of Canada. And while stats also indicate that Edmonton probably has more retail space per capita than elsewhere in Canada, Slatter doesn’t think that means the city is overbuilding.
“The vast majority of the current developments will be fully pre-leased before they are completed,” he adds, so they won’t have much impact on the vacancy rate.
“The way we develop and build our stores is that they are significantly larger than other markets and retailers need more of them to capture the market here,” he adds.
Those developments feed on growing residential developments sprawling in suburbia, he says.
There is another reason for the active retail market. Edmontonians have lots of money and they like to shop, according to stats that show household incomes are considerably higher than the Canadian average as are its residents’ spending habits, Slatter says.
“Canadian retailers are noticing that it translates to increased profitability in their Alberta stores,” he notes, adding that American ones as well see the city as a good investment. Most new retail developments are big box centres or renovations of existing enclosed malls.
Gone are the days of the new enclosed mall — too expensive to build and operate plus Edmonton is well served by the type of tenants regional malls offer, says Slatter.
|MOST POPULAR STORIES|
|TODAY’S TOP CONSTRUCTION PROJECTS|
These projects have been selected from 541 projects with a total value of $2,992,674,310 that Reed Construction Data Building Reports reported on Thursday.
$290,000,000 North York ON Prebid
$105,000,000 Metro Toronto Reg ON Prebid
$75,000,000 Ottawa ON Prebid
- VIDEO: Economic Update May 21, 2013
- Prompt payment bill headed to committee
- Final Phase
- A return to core values a must for banks: Carney
- OHMPA on the road with informative seminars
- Local 675 strike ends after new agreement ratified
- NDP says it will support Liberal budget, averting spring election
- Measure of U.S. economy’s future health rises 0.6 per cent in April after March dip
- Terratec awarded Brighton, Ont. Lagoon Clean-Out Project contract
- Fundraising campaign to reach target for new Shriners Hospital for Children
- George Brown College building named after Tridel CEO
- Construction Site Arson
- VIDEO: Journal of Commerce Update for the week of May 27th, 2013
- Historic church renovation reaches new heights
- Hiring of foreign workers for hospital project outrages union
- Acetylene torch explosion causes significant damage
- Festival of Architecture hits Halifax
- Winnipeg Southwest Transitway wins award
- Vendor performance is key measurement
- NDP leader spoke to police about corruption
- Big contract down under for ATCO Structures
- RFQ issued for Kamloops hospital project
|ALEX’S ECONOMICS BLOG|
Reed Construction Data Canada’s Chief Economist Alex Carrick discusses current developments in the North American economic environment with emphasis on the construction industry.
- An Overview of Prices and Sales in the Diverging U.S. and Canadian Housing Markets (April 25, 2013)
- Canada’s Precarious Dependence on the Commodity Price Super-Cycle (April 22, 2013)
- Twenty major upcoming residential and transportation terminal construction projects - April 2013 (April 15, 2013)