As Luxury Retail Rises, Whither Suburban Power Centres?

This year is big for top malls—Yorkdale, Square One, Eaton Centre and Sherway Gardens. All are nearing wrapping extensive redevelopments and set to welcome big-name US retailers like Saks Fifth Avenue and Nordstrom. And they're seeing expansion of domestic luxury stalwarts Holt Renfrew, Harry Rosen and Simons. Prospects for upmarket urban retail are bright, says CBRE valuation and advisory services EVP Paul Morassutti (above with Adam Hannah). Not so much for power centres in “less than stellar” locations, though, particularly those still suffering from Target’s exit and Future Shop-Best Buy consolidations.

Investor interest in power centres—often stranded in the suburbs and filled with “middle of the road” fashion tenants—has “really lessened over the year,” Paul tells us. "In some cases, there are malls that might be virtually unsaleable if their issues can’t be corrected.” Target’s failure had “100% nothing to do” with Canada’s retail landscape, he stresses. But most of its abandoned locations have been “picked over" already, so landlords seeking to fill those spaces may be forced to carve them up—ditto for vacated Future Shops. “And the pool of potential tenants may still be thin," says Paul. "That’s a major area of concern.”

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