You are not hearing a lot in the press about the Tsawwassen Mills Mega Mall, built by the Quebec Ivanhoe Cambridge. Ivanhoe Cambridge is the real estate arm of the Caisse de depot et placement du Quebec, which is the institutional fund manager for the Quebec pension plan and other Quebec pension investors. In terms of assets, Ivanhoe Cambridge reported investments of $55 billion dollars at the end of 2015. That’s the equivalent of four proposed Massey Bridges with carrying costs, with an extra 3/4 of a bridge thrown in.
Tsawwassen Mills is similar to the other two mega malls in this Quebec pension fund’s stable, Cross Iron Mills near Calgary and Vaughan Mills near Toronto. The advertising is the same, the layout is the same, and very similar retailers. This concept may be working in the other two places-but in Vancouver? Not so much. Last night there were 18 cars in a section of a parking lot for 400. The stores during the week are empty. There is no one walking around the mall. Employees and carless shoppers huddle out to mean concrete strips on Highway 17 for direct bus routes to and from the mall, instead of waiting for the bus that meanders through the roads. There is no density close by to fortify the mall, and a lot of locals furtively go there when necessary, preferring to patronize their local merchants in Tsawwassen and Ladner. There may be life and a comforting diversity of folks there on the weekends-on the weekdays, there is no joy and no buzz. For a generation of younger on-line shoppers who can also zip to the USA for a day of shopping, it’s just not that appealing, nor easily accessible.
Warren Buffett in the Business Insider in an article written by Hayley Peterson is calling it quits on the retailing industry in the United States. As Price Tags has previously written, Canadians are a little behind the times on the online trends. Buffett sees the next decade as being completely transformative, and that the new retail is on-line.
“The department store is online now…I have no illusion that 10 years from now will look the same as today, and there will be a few things along the way that surprise us,” he said. “The world has evolved, and it’s going to keep evolving, but the speed is increasing.”
Buffett has also sold $900 million of Walmart stock, choosing instead to invest billions in airlines. This was an interesting strategy in that Walmart is morphing itself to catch up with Amazon, the major on-line retailer.
“Brick-and-mortar retailers have announced more than 3,200 store closures so far this year, and Credit Suisse analysts expect that number to increase to more than 8,600 before the end of the year. For comparison, 6,163 stores shut down in 2008, the worst year for closures on record. Stores are closing because of the rise of e-commerce and shifts in how people spend their money. Shoppers are devoting bigger shares of their wallets to entertainment, restaurants, and technology and spending less on clothing and accessories.”
Cohen & Steers released a report last week on asset management which is their specialty. “We see this retail weakness, which is occurring despite a relatively healthy economy, as part of a permanent evolution in how and where Americans spend their money,” the firm, which manages $58.5 billion in assets, said in the report. “We expect the paradigm shift taking place to dramatically alter the retail landscape, with potentially significant implications for real estate investors.”