Ken Mariash remembers when the Deerfoot Meadows shopping complex in Calgary looked great on paper, but struck some as a little too ambitious given the economic scene of the mid-to-late 1990s.
Fast-forward 10 years and Mariash, a managing partner for Heritage Partners LP - the man who bears most of the responsibility for what's happening at this 1.7-million-sq.-ft. retail power centre located on a 360-acre former industrial site just off Deerfoot Trail - can't help but smile.
In retail, as in real estate, it seems timing is crucial and location is everything.
It turns out Deerfoot Meadows has both.
|Photo by Kristian Bogner|
|Deerfoot Meadows plans to offer a network of trams to ferry shoppers around the complex.|
Anchored by Ikea, Best Buy, Mark's Work Wearhouse, Linens 'N Things and Michael's, to name a few, Deerfoot Meadows opened its first stores in 2005.
Today, the project attracts about 60,000 visitors a day - a figure Mariash expects to rise significantly by the time the outdoor shopping centre is built out in 2008, when the visitor count is predicted to tip the scales at somewhere between 30 and 40 million people a year.
By then, Superstore and Wal-Mart will have opened their largest Calgary stores on the site and the last two phases of the project, a residential condominium development and Deerfoot Village, a new fashion, dining and entertainment area, should be under construction.
The latter development, billed as a lifestyle centre, aims to go where no suburban Canadian retail space has really gone before. Its collection of high-end specialty retailers and restaurants will feature a pedestrian streetscape, complete with public art.
Whereas Deerfoot Meadows' power centre stores aim to bring shoppers in, the Village will be designed to make them linger.
If all goes well, the site will be serviced by a network of trams that will ferry shoppers from one part of the development to another on a regular rotation. "We should be able to start that in '08. I think there'll be enough volume there," notes Mariash.
With out-of-province licence plates already dotting the parking lot, the development's already "got some reach and it will obviously be more predominant when we get the whole three million feet finished."
Labour shortages and rising construction costs aside, Mariash expects the next phases of the project to come online as planned. "We've had a pretty good following at the property for construction fulfilment," notes Mariash.
And with retailers and restaurants still jockeying for space in the development, demand is strong. "Whatever costs prevail - the market responds."
That's pretty much the case across Calgary, where new retail space is being added in virtually every part of the city - albeit not at the same pace as demand, says Don Dickson.
A long-time real estate agent and former president of the Calgary Real Estate Board (CREB), Dickson manages CREB's commercial division.
"It's absolutely amazing what's going on out there right now in terms of the shortage of square footage for every type of business in the city," says Dickson.
With demand high, most of that commercial space is pre-leased "before you even dig a hole in the ground. That's likely to continue because as new projects become available, they're going to be put out to the marketplace immediately."
With 35 commercial buildings approved or given the go-ahead, Calgary's commercial construction accounts for about 45 per cent of the nation's total. CREB expects that to pass 50 per cent in 2008.
Although the latest statistics aren't in for the fourth quarter, the city's retail vacancy rate hovers at around two to 2.5 per cent, with rates on the rise. Dickson says he's heard of one 17th Avenue S.W. retail space where "the lease rate went from somewhere around the $17 to $22 mark - and this year it's $45 a square foot."
Prices at premium shopping centres are also up. Dickson says space at one of the city's biggest centres is quoted at $45 to $55 a square foot, plus operating costs of approximately $26 a square foot.
A third-quarter report by Colliers International notes leasing hotspots for Calgary in late 2006 and early 2007 include Deerfoot Meadows and The Market at Sheppard in the southeast; the Chinook Centre expansion and Aspen Landing in the southwest; Beacon Hill in the northwest; and Saddleridge in the northeast.
Rising lease rates aside, retailers in premium locations are posting records of their own, says Mariash.
Retailers at Deerfoot Meadows tell him "they're doing $1,000 a square foot or better (a year). It's in many cases their best store in the nation - forget about Calgary."
Figures like that are a significant boost to a retailer's bottom line. Mariash estimates that merchants at Deerfoot Meadows are "probably paying in the rental component, eight per cent of their sales volume, where the national average is probably 15 to 18 per cent, if not higher."
Numbers like that are the main reason Mariash and his team are "being swarmed by a couple dozen restaurants in all categories" that want into the new Deerfoot Village.
But he admits the competition for space doesn't make his job easier. Determined to provide the "right" mix of fashion, fine dining and entertainment for a development that will include a residential component that could feature as many as 500 units, Mariash is deliberately seeking the input of fashion leaders - and he's taking notes.
"We're trying to create a Village there that has international ambience. We want to provide the best possible facade and facilities to really appeal to the career and adult shopper."
Mariash, the developer, concedes that kind of attention to detail takes time.
Mariash, the dreamer, is also convinced it pays off.
(Joy Gregory can be reached at email@example.com)