The pressure on the retail segment of commercial real estate has increased as new stats show a decline in Canadian retail sales.
Statistics Canada says that sales were down 0.1% in May following an upwardly-revised 0.2% increase in April (from 0.1%); analysts had predicted a 0.3% increase in May. Without auto sales, the decline was 1%.
Earlier this year, Roelof van Dijk, CoStar’s head of market analytics, told the Vancouver Sun that retailers are still performing well in Canada’s big cities but that sales are dominated by Toronto, Montreal, and Vancouver.
And retailers are challenged by higher rents and property taxes.
“It’s come to a point where retailers are having a real hard time absorbing increasing rental rates, increasing gross rents as well amid an environment where (overall) retail sales are weak and expected to remain weak for the next little bit,” van Dijk said.
The latest stats show that Toronto, Montreal, and Vancouver continue to dominate.
The data also shows the continuing rise of e-commerce – good news for the industrial CRE market – with retail e-commerce sales reaching $1.8 billion in May (on an unadjusted basis), accounting for 3.0% of total retail trade, compared with 1.9% of total retail trade in May 2016 (the first year this data was published).
On a year-over-year basis, retail e-commerce increased 21.8%, while total unadjusted retail sales were up 1.6%.
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