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Furthermore, Gomez believes Canada is not as “over-retailed” as the U.S. The retail sector consumes less space in Canada than in the U.S. when normalized by sales or consumers. The economical use of retail space has been a plus for Canada during the pandemic.
One of the most noticeable retail changes is the rapid shift to e-commerce. This has favoured traditional e-tailers, such as Amazon.com Inc., but brick-and-mortar retailers already developing their e-channels have also benefited from the large-scale pandemic-driven adoption of e-commerce.
The pandemic has only accelerated pre-pandemic e-commerce trends, Hernandez noted.
Retailers and investors are bracing for an uncertain future as lockdowns have returned to Canada’s more populous parts in response to the pandemic’s second wave. December sales are critical for the bottom line of most retailers, but current lockdowns and restrictions make those sales uncertain. This has severe implications for retail landlords.
In Canada, many enclosed malls are owned by institutional investors, such as real estate investment trusts and pension funds, which are well-capitalized and can withstand disruptions to rent payments better than private landlords.
Institutional investors being active in the retail space in Canada implies that landlords would have the means to adapt their retail spaces in response to economic shocks or sudden changes in retail channel preference. The same might not hold true for open and strip malls where private investors dominate.
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