All is not well in merchandising mall land. As the Globe and Mail reports the Quebec “caisse de depot et placement du Quebec” has a real estate arm named Ivanhoé Cambridge. This real estate arm is attempting to sell their shares of three Canadian malls that are expected to sell for one billion dollars each. Ivanhoe Cambridge also owns the newly minted 1.2 million square foot Tsawwassen Mills Mall (with 6,000 parking spaces) built on class one agricultural land in Delta, away from supportive customer density and without good transit connections.
Ivanhoe Cambridge owns half of the three malls they are selling-Cadillac Fairview owns the other half. Coincidentally, Cadillac Fairview is the real estate branch of the Ontario’s Teachers’ Pension Plan, while the Quebec owned Ivanhoe Cambridge is controlled largely by a group of Quebec governmental pension plans. The three malls on the block include Fairview Mall in Toronto, Market Mall in Calgary and Richmond Centre in Richmond, B.C.
These commercial mall real estate services are quite secretive, and Ivanhoe Cambridge is no different. Telling the Globe and Mail “We don’t comment on rumours about our investment strategy” speaks volumes about the roller coaster ride occurring in shopping centre retail. Sears Canada is closing, Toys R Us is under creditor protection, and Hudson’s Bay Co. is selling store space to an office sharing company called WeWork as reported in this Price Tags Vancouver post.
These three jointly held malls “generate around $900 in sales per square foot, according to the Retail Council of Canada. “The top malls are in great locations and will always do well,” said Alex Arifuzzaman, a retail real estate adviser with InterStratics Consultants. Compare those figures with those of Tsawwassen Mills Mall which is making $275 per commercial retail unit square foot.
Ivanhoe Cambridge is getting rid of shared assets in their portfolio, perhaps after the nasty spat also reported in Price Tags with Sears Canada in Metrotown. In that case, Sears wanted to go ahead with a mixed use development on their portion of the Metrotown site, but was required to give notice of their intent and could not close the store for 150 days. Ivanhoe Cambridge was forced to disclose that they were also looking at “redevelopment options”. Certainly by getting rid of pesky co-ownership allows Ivanhoe Cambridge to develop their own plans unfettered by partners. As the Globe and Mail article observes “According to its most recent activity report, Ivanhoé said it is redeveloping and expanding three other shopping centres in Quebec and British Columbia. The company said it would continue to “increase the value” of its shopping centres and “capitalize on development opportunities.”Over all, Ivanhoé said it planned to “significantly increase the proportion of growth market investments in its overall portfolio, with the goal of diversifying its markets and asset base.”
Is there a future in big mall retail with on-line shopping and the return to downtown shopping? What will Ivanhoe Cambridge’s next steps be with Tsawwassen Mills Mall?
November 20, 2017