Business mogul Thomas Fung believes that B.C.’s HST is helping him attract buyers for his newest expansion of Aberdeen Centre in Richmond.
On a three-day weekend in late September, he sold $80 million, or 75% of the combined retail and office space at his Aberdeen Centre mega-mall’s 160,000-square-foot Phase 3, which is set to be complete in 2013.
“The HST does not apply to commercial properties like strata units in malls or office units,” Fung told Business in Vancouver. “Right there, that’s a saving of 12%.
“You have to pay the HST on commercial leases.”
Fung believes that enthusiasm for his mall’s extension, dubbed Aberdeen Square, also stems from the facility’s location adjoining the Aberdeen Station. That access attracts customers and makes it easier for employers to recruit staff to stores in what is currently a 550,000-square-foot mall.
The Royal Bank of Canada (TSX:RY) will be Aberdeen Square’s anchor tenant. The bank signed a lease for 5,000 square feet of space in a unit that Fung then sold to an unidentified investor.
“We’ve been preparing for this for five or six years already,” Fung said. “So, buyers were already aware of it. It didn’t take too much promotion or advertising. It was through word of mouth that buyers lined up for hours.”
In 2008, Fung told BIV that he anticipated his mall’s Phase 3 to be completed by the end of 2010.
Fung expanded Aberdeen Centre once before.
The complex’s Phase 2 was completed in 2008 and included two floors of retail space and six floors of apartments that combined to add about 50,000 square feet of retail space and 83,000 square feet of residential space.
Delaying the Phase 3 sales launch because of the economic downturn meant that construction costs are lower.
Another fortuitous development was that China finally granted Canada approved destination status, which means that Chinese citizens are more free to visit Canada.
That approval played a key role in Aberdeen Square sales success given that Fung’s mall is aimed at an Asian demographic.
Japanese household and lifestyle products giant Daiso’s 25,000-square-foot location makes it Aberdeen Centre’s largest tenant.
HSBC Bank Canada is currently the only bank in the mall.
Asian franchisors have frequently made Fung’s mall their launching pad for growth in North America.
That happened with Japan’s Beard Papa, which now has three other Lower Mainland locations.
It also happened recently with Chef Hung Taiwanese Beef Noodle, which, Fung said, is also set to expand into the U.S.
Fung is also taking his mall upscale while simultaneously reducing his personal stake in many of the mall’s shops.
When he tore down his original Aberdeen Mall in 2002 and rebuilt a complex three times the original size, he signed five-year leases with many tenants.
When some of those leases expired, Fung said he didn’t allow some leasees to renew.
That enabled him to have space for a Lamborghini dealership and Italian piano-maker Fazioli, which sells $500,000 instruments.
Fung also closed some of the many stores that he owns in his mall.
Stores gone, or soon to close, include Pot Art, Living Colours and A Light Idea.
Apple Corp. (Nasdaq:AAPL) opened a store at Richmond Centre on September 11. Fung told BIV that the tech giant also plans to open a small location at his Aberdeen Centre.