Retailers, condos perfect bedfellows

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Retailers, condos perfect bedfellows

Living above the store has lost its stigma

 

Garry Marr, Financial Post Published: Wednesday, April 28, 2010

 

The Manulife Centre, on Bloor Street in Toronto, was built in 1972, making it one of the first mixed-use developments.

 

My parents will probably be shocked to hear this, but living above a store is becoming trendy in many Canadian cities.

 

The concept has changed from the day when immigrants ran the variety store below and lived in the apartment upstairs so that they could be close by for the endless hours they worked to get ahead financially.

 

Today, mixed-used developments feature grandiose big-box retail space at ground level and $500-a-square foot condominiums rising 65 storeys above.

 

"This all started in the 1970s with some mega projects in the larger markets -- Toronto, Montreal," says Alex Manefski, an associate director with Altus Group who has put together a report on the trend. The Manulife Centre on Bloor Street in Toronto, along what is now known as "Mink Mile," was one of the first mixed-use developments, built in 1972. Today it still boasts residential living atop the boutiques on its lower levels.

 

Mr. Manefski's report shows the concept has taken on new life during this housing cycle, with major retailers acting as anchors in condominium and rental property developments in Toronto, Vancouver and Calgary. For the retailers, the concept gives them access to growing populations in downtown cores created by condominiums.

 

"They want to gain a foothold in the downtown markets," Mr. Manefski explains. Many of the country's major retailers, such as Canadian Tire Corp., are willing to alter their traditional floor plans to fit downtown spaces.

 

"There's a convenience to it for consumers because they don't have to hop in their car and drive into the suburbs or another location that is not right downtown," Mr. Manefski says.

 

There would be a certain advantage to having a 50,000-square-foot grocery store an elevator ride away. You can buy everything fresh whenever you need it--24 hours a day.

 

But what about all that traffic milling about on the ground floor of your home? "People who move downtown are not too concerned with having a lot of people around," Mr. Manefski says.

 

For retailers, planning restrictions and a lack of land in the downtown core have forced them to reconsider their tried-and-true floor plates and store designs. "The potential for standalone, larger-format retail developments in dense central areas of the country's largest urban areas is generally not feasible due to the high cost of land and simple unavailability of large development sites," Mr. Manefski's report says

 

Edward Sonshine, chief executive of RioCan Real Estate Investment, which has been part of two mixed-use residential developments with ground-floor retail, says the concept is probably here to stay. "You are getting [retail] tenants that would typically be in the suburbs," Mr. Sonshine says.

 

RioCan, the largest REIT in the country, is currently part of a mixed-use condominium development in Toronto's west end that has three floors of retail and almost 100,000 square feet of residential space. RioCan is keeping the retail space while its partners sell off the residential space.

 

"Land is just way too expensive for traditional stores. If you want to serve those people [downtown], this is the only way to find space. From the developer's point of view, the value of retail space is higher than residential space, perhaps double," says Mr. Sonshine, adding that the retail space is usually on lower floors where nobody wants to live.

 

"I think you will continue to see more of this. You'll see this in all the major cities in Canada," Mr. Sonshine says.

 

But he admits there is still a negative connotation to living above a store.

 

"We've been totally careful to separate the residential from the retail. We're making the roof atop the retail facility a green space park for the residential owners," he says.

 

That certainly sounds more appealing that living above a convenience store.

 

gmarr@nationalpost.com

http://www.nationalpost.com/news/canada/toronto/story.html?id=2958954