Think twice, enter once
Disappointing results for U.S. retailer Target Brands Inc. following its first quarter in Canada will be a discussion point rather than a barrier for other U.S. retailers contemplating a move north, according to Colliers International.
Colliers recently produced a report regarding the U.S. retailers most likely to consider setting up shop in Vancouver. The report looked at 221 publicly listed retailers, found the 95 that have no presence in B.C. and discovered that 14 of the retailers have both a concentration of stores in the Pacific Northwest and financial statements indicating “healthy growth.”
Of these, 10 retailers – including Abercrombie & Fitch, Maidenform and Under Armour (as well as O’Reilly Automotive, the sole non-fashion contender) – were identified as possible new entrants to Vancouver.
But with Target blaming Canada for lower profits in the current fiscal year (its profits for the second quarter, ended August 3, were 13.2% below the same quarter last year), some retailers might think twice about their plans.
“The Target results ... will be the first topic of conversation in boardrooms across the U.S. of retailers contemplating their first Canadian stores,” said Jim Smerdon, a vice-president and director of retail consulting for Colliers.
While most U.S. retailers are unlikely to undertake as ambitious a debut as Target, which acquired Zellers and plans to have 124 locations across Canada by Christmas, Smerdon said its experience will give other retailers valuable lessons about how consumers are likely to respond, and what they can do to improve their own chances of success.
“If their Canadian expansion plans are still in the early stages they might look harder at an incremental growth approach rather than acquiring an existing chain, to limit exposure and risk and to test their pricing strategies and customer feedback at a small scale,” Smerdon said.
Back to school
With university students beginning a new term, many landlords have a new crop of tenants helping with mortgages or otherwise generating cash flow for their properties.
A rental standards database the city launched in February is helping ensure those tenants face fewer problem properties, and that offending properties are cleaned up faster.
Carli Edwards, assistant director, inspections for Vancouver, said the city typically fields 2,800 to 3,000 property complaints a year through its 3-1-1 hotline. Complainants take issue with matters ranging from building code violations to uncut grass and property appearance, not just at rental residential properties but all types of properties.
While those numbers are unchanged, Edwards said the number of properties in the rental standards database with unresolved problems has fallen from 750 when the database was initially established to approximately 300 today.
Owners with offending properties include bcIMC Realty Corp., Hollyburn Properties Ltd., PHS Community Services Society and even the City of Vancouver, but Edwards said the database has helped bring attention to outstanding issues and co-ordinate their resolution.
“Not only is the number of buildings reduced, the overall bulk number of violations out there has reduced, because it brought everyone’s attention to it,” she said. “Most of the issues that we encounter, people do [resolve] within the timelines we give them.”
The volume of issues with any given property has also fallen, from 200 when the database was set up to 114 today (a 158-unit property at 160 East Hastings Street). This is facilitated in part by the sharing of information among city agencies, including housing, safety and fire inspectors.
“We can look at the worst buildings instead of the one that we individually think is bad,” Edwards said.
Good news, bad news
The latest RBC Economics housing affordability report notes that a stronger housing market in Vancouver this spring knocked affordability back a notch in the second quarter.
With housing sales posting double-digit growth in the quarter, prices strengthened modestly even though they have yet to transcend levels reached last summer.
“These latest developments strongly suggest that the market correction has run its course in the area and that the risk of a catastrophic outcome has greatly diminished,” the bank reported, lamenting: “It took somewhat of a toll on affordability, which remains by far the poorest in Canada.”
With sales continuing to improve through the summer, count on RBC to bemoan a further erosion of affordability in its next report later this fall. •
