With urban retail foot-traffic lagging and suburban vacancies trailing their big-city counterparts, Metro Vancouver stakeholders are betting on “retailtainment” and event-driven shopping by the likes of Swifties to keep tills ringing.
Among other trends in the region's retail real estate market is the rising demand for “warm-shell” space, according to a Jan. 24 Colliers Canada report.
Warm-shell space requires minimal buildout or finishing and is ready for a tenant to quickly move in and customize. Examples include pre-installed venting and kitchens in quick-service restaurant spaces, said Susan Thompson, associate director with Colliers Canada.
“We’re definitely still seeing a lot of searches out there, especially for spaces that are at least mostly ready for a tenant to come in and fixture,” she said.
“Tenants definitely prefer warm-shell space, particularly food and beverage operators. … They need to be able to visualize a space quickly. All of the pieces along the chain – getting permits, the costs associated with finishing that space, the time it takes to get permits, securing the workers and subcontractors – if you can reduce all of those pieces along the chain, it’s going to make a space much more desirable.”
Meanwhile, “retailtainment” is increasingly visible in retail developments, Thompson said. Indoor recreation can include pickleball, trampoline parks, skateboard parks, gymnastics, axe-throwing, mini-golf, go-karting, video-game arcades, roller-skating, kids’ play places, rock-climbing, and pop-up galleries and Instagram opportunities.
“People are looking for experiences,” Thompson said “There’s all of this stuff that helps create a more robust, vibrant environment around shopping, and retailers and planners for areas are trying to bring in more of this type of entertainment so that it makes for a better community as a whole.”
It’s part of a larger trend of families combining their errands into a smaller radius closer to home, she said, which also explains why Colliers’ suburban vacancy rate (0.7 per cent) is lower than the urban rate (3.4 per cent).
The scarcity of developable sites in Greater Vancouver is prompting retail landlords to capitalize on density and incorporate retail into residential and mixed-use developments, Thompson said.
“It has to do with the new supply of retail options, and that’s restricted by new master-planned communities and mixed-use buildings, but it’s also a fundamental shift that started to happen before the pandemic started but was definitely accelerated during the pandemic, when people started to work from home more, so they started doing more of their shopping closer to home,” she said.
“With the downtown seeing less occupancy and foot traffic, it caused higher vacancy in downtown and urban areas as a result. So we’re seeing more focus towards suburban and transit nodes where people live.”
In addition to warm-shell space and retailtainment, Colliers also noted that event-driven shopping is becoming more apparent, with spikes in spending reported around major concert tours like Taylor Swift’s Eras tour in December, which drove a 154-per-cent increase in downtown spending levels, according to payment processing firm Moneris Solutions Corp.
Next month’s Invictus Games and 2026’s FIFA World Cup matches could also boost the region’s retail sector, the Colliers report said.
Meanwhile, stable vacancies and rental rates, limited supply and tight discretionary spending are among the themes noted by CBRE Limited in its H2 2024 Retail Rent Survey, which was released Monday and provides a snapshot of retail trends and rents in the Vancouver market.
While noting that new retail supply is closely linked to mixed-use development, which is slowing, CBRE said tailwinds for Vancouver’s retail sector include regional population growth and a healthy influx of tourism.
“While local consumers have been resilient in recent years, consumer spending is weakening which will likely result in reduced spending on non-essential or luxury items,” said the CBRE report, which found stable net asking rental rates for all formats and key urban areas in Vancouver.
