Two downtown sites could be Target for U.S. retailers

Development value up for Vancouver's Larwill Park, Canada Post building properties
BC Investment Management, the new owner of the Georgia Street site of Canada Post's longtime Vancouver headquarters, is rumoured to be considering including retail in its redevelopment

Retail and real estate analysts believe large retailers such as Wal-Mart or Target could start pushing for construction of a new mall on either of two downtown blocks that are ripe for redevelopment.

Canada Post's sale in January of its longtime Vancouver headquarters to BC Investment Management Corp. (BCIMC) has opened up the block bounded by Georgia, Homer, Dunsmuir and Hamilton streets.

Two blocks east is Larwill Park, which is owned by the City of Vancouver and bounded by Georgia, Cambie, Dunsmuir and Beatty streets.

The Vancouver Art Gallery (VAG) is hoping to convince the city at a meeting, likely to be held in early March, that it should be given the site – which some estimate to be worth $200 million – to build a new $300 million gallery.

"Either one of those sites could anchor a downtown shopping complex and support all the traffic and financing that's needed to create an effective centre," James Smerdon, vice-president and director of retail consulting at Colliers International, told Business in Vancouver.

He expects Target to open 49 Canadian stores this spring, mostly in Western Canada and southwestern Ontario.

The chain will then open an additional 17 stores this summer and another 48 stores in the fall, mostly in Quebec and Ontario.

"They're looking at sites for new construction, but the ones they're opening this year are entirely former Zellers locations.

"They've taken those stores down to the studs. They're brand new stores."

Smerdon added that, despite umpteen new shopping centres or mall expansions slated around Metro Vancouver, demand has yet to plateau for new retail development, particularly downtown, where neither Target nor Wal-Mart has a presence.

"They could anchor a downtown shopping complex – either one of [the two sites] – and support all the traffic and financing that is required to create an effective centre."

Bob Nicholson, retail asset manager for Morguard Investments Ltd., agreed that the downtown core can support more retail projects.

But he added that it could be a challenge to get large U.S. retailers to pay the high cost of locating downtown.

Nicholson knows this from experience, given that it took him more than half a year to successfully get Victoria's
Secret to commit to take the former HMV site at the corner of Robson and Burrard streets.

Other real-estate watchers, such as Macdonald Commercial Real Estate Services Ltd. managing director Tony Letvinchuk, say that although retail rents will fetch several times that of an office lease rate, the best use for Larwill Park would be something that recognizes its heritage as a gathering spot once known as Cambie Street Grounds, where soldiers from nearby Beatty Street Drill Hall paraded and royalty watched in 1901. •

Real-estate broker and art collector Bob Rennie told Business in Vancouver that instead of being the site for a new art gallery, Larwill Park is better suited to office towers above a new mall.

"The Larwill Park site is where the Crate & Barrel and a great shopping centre should go," said Rennie, who has spearheaded a campaign to convince the VAG to build six or seven specialized yet smaller gallery spaces and spend half as much on capital costs so it can spend more money on art.

Rennie added that lower costs would also mean that government and corporate philanthropy could be spread to other arts groups. "The Larwill Park site is becoming really valuable," he said.

But Rennie's ideas fall flat with some major corporate philanthropists.

"Bob has an incredibly negative view of the VAG and [director] Kathleen Bartells that is not rational," Keg Restaurants owner David Aisenstat, who is on VAG's board of trustees, told BIV.

Representatives from the largest philanthropic Vancouver-based companies would not comment on how supportive they are either of VAG's proposal or Rennie's.

"There are all sorts of philanthropic projects [going on in the city] and to stay on top of every one and have a point of view, we'd have to have full-time people working on it," Marcia Smith, Teck Resources Ltd.'s senior vice-president of sustainability and external affairs, told BIV.

"As a mining company, that's not something we can do."

She said Teck donated about $22.5 million last year for community projects and that the lion's share of that cash was distributed in B.C. because the company's workforce is largely based here.

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