Calgary retailers flying high

Retailers are continuing to fill up available space in Calgary as consumer spending in the province outpaces 2011 levels.
Statistics Canada said Wednesday that Alberta retail sales reached $5.6 billion in June, up 6.6 per cent from a year ago; the country’s highest annual rate of growth despite a 1.3 per cent monthly decline from May.
“There’s a lot of pressure on good quality space from good quality tenants looking to expand (to Calgary),” said Jeff Robson, vice-president and associate broker with Barclay Street Real Estate Ltd. in Calgary.
“Interest and expansion is coming largely from within. But U.S. retailers are certainly entering our market. Where once we would have been overlooked in favour of three or four cities in Canada, now we’re considered a hot place to look.”
Calgary’s overall retail vacancy rate of 1.9 per cent has been declining since 2009, according to Barclay Street.
Robson said it’s possible retail space in the central business district could expand by almost one-third, given developments in the East Village and Beltline, among other areas. Current inventory is about 6.4 million square feet.
“I could see a million to two million square feet of inventory come online in the next three to five years based on the projects that are coming up, the tenants that are looking,” he said.
Statistics Canada said retail sales fell in six provinces in June with Alberta reporting the largest decline in dollar terms after posting the largest increase in May. Lower sales of new motor vehicles were the main reason for the June decrease, it said.
Nationally, sales of $38.7 billion were up 1.7 per cent from a year ago but down 0.4 per cent on a monthly basis.
“While wages and consumer prices in Alberta have been increasing over the past couple years, another big reason provincial receipts are so much higher in 2012 relative to 2011 . . is the jump in inter-provincial migration that occurred over the period,” said William van’t Veld, economist with ATB Financial.
The surprise drop in June sales at the national level was broad-based, suggesting households are becoming a little more cautious, though cross-border shopping may have played a role as well, said Benjamin Reitzes, senior economist with BMO Capital Markets.
“Indeed, annual sales growth hit the slowest pace in 16 months and activity is actually lower since the start of the year,” he said.
“The constant haranguing by policy-makers urging households to borrow more cautiously, along with slowing job growth, has prompted some restraint. Given that employment contracted in July and likely won’t improve significantly over the coming months, and with the added drain of cross-border shopping, retail sales will have difficulty gathering much momentum through the second half of the year.”
Canadians made a record 1.9 million overnight trips to the U.S. in June, and most overnight travel was by car, with Canadians taking more than 1.2 million trips – a 10 per cent increase month over month. As of June 1, cross-border shoppers on an overnight trip are allowed to declare $200 worth of purchased goods. Before they were only allowed $50. For people on a jaunt of between two and seven days, the limit has doubled to $800 from $400. Of the 11 subsectors that Statistics Canada tracks, seven of them reported lower sales – representing 64 per cent of the country’s retail trade.