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U.S.-based retailers taking advantage of city’s well-priced commercial market
Jan 24, 2013
by Todd Lewys
For years, Manitoba’s residential and commercial real estate markets lagged behind most other markets in the country.
That’s no longer the case. For the past seven or eight years, the province’s residential market has been one of the hottest in the country. Now, the commercial market is starting to heat up courtesy of our neighbours south of the border.
“The Americans are finding that they have to compete head-to-head with Canadian businesses,” said Wes Schollenberg, managing director of Avison Young’s Winnipeg office. “For example, businesses such as TD (Bank) are thriving in the United States. As a result, the border is becoming increasingly fuzzy. Canadian businesses are entering the U.S. to compete for consumer dollars, and American businesses are coming here to do the same.”
Whereas names such as Target, Lowe’s and Marshall’s were associated with taking a shopping trip to Grand Forks or Fargo 10 — even five — years ago, those retailers will soon become tenants in shopping complexes throughout the city. 
There’s one central reason why U.S. retailers are coming, according to Schollenberg.
“They’re coming because they believe they can make a profit,” he said. “Canada is the last frontier for them, so to speak. The economy is a lot stronger here than in the U.S., so they want to take advantage of that.”
RE/MAX Professionals’ Gary Davlut said business from the United States are also coming to Winnipeg for another reason.
“Our commercial market is well-priced, and that will attract development,” he said. “We’re still a little behind other markets, so our commercial land is still affordable. 
“And with our strong economy, we’re the little province that could,” he added. “We’re that diamond in the rough that the U.S. market is finally starting to take notice of.”
Ken Jones, chair of Shindico’s commercial division, said the influx of U.S.-based retailers is not only going to heighten competition between American and Canadian stores, but between American-based retailers.
“Take Target’s entry into the Winnipeg market,” he said. “They’re a tier one retailer, and their presence is causing a domino effect. Other retailers in Grant Park Mall know that they’ll soon be arriving, so renovations are happening to the mall so it can better accommodate the increased traffic flow that Target will bring to the mall.”
At the same time, competitors such as U.S.-based retail giant Wal-Mart aren’t taking Target’s entry into the Winnipeg market sitting down.
“Wal-Mart is reacting by expanding its stores in shopping centres such as Kildonan Place,” said Jones. “That’s a good thing because it creates growth and stability for malls. Consumers will benefit from the increased selection that comes from growth, while malls will experience greater stability in the sense that other key tenants are going to stay for the longer term.”
The good news is that the commercial growth is not going to be comfined to just one area of the city. Marshall’s and other retailers will soon become part of the new shopping complex at Polo Park; Lowe’s is planning to open a new location along the Kenaston Boulevard shopping strip. And more commercial development, in the form of the Seasons of Tuxedo, is projected to spring up adjacent to IKEA at the junction of Kenaston and the Sterling Lyon Parkway.
“It’s also conceivable that tracts of land next to 
Kildonan Place will also be developed,” said Jones. “That’s good news for the city, and consumers.”
Schollenberg concurred: “Selection is a good thing. At the same time, retailers are still going to have to provide good value, whether you’re a Canadian or American company. Now that more U.S.-based retailers are coming, Canadian retailers can’t be complacent. If Canadian companies aren’t willing to come and fill a need, the Americans could well see that need and come to fill it.”
As for future development, Schollenberg said a lack of commercial land could limit the entry of both Canadian and American businesses into the Winnipeg market.
“We don’t have enough land. More businesses would be coming here if we had more,” he said. “There’s going to be an increase in the number of both U.S. and Canadian retailers coming to the city, but the increase could be greater if more land was available.”
That perceived lack of land might not be a bad thing, added Jones.
“I think our inventory is being well-used, and that’s keeping things competitive,” he said. “Typically, we haven’t overdeveloped, and developers here are savvy. Realistically, not every retailer is going to show up. Being selective helps keep the city’s character, while offering consumers selection that’s focused on delivering value. 
“The fact that retailers such as Target, Lowe’s and Marshall’s — even (Sweden-based) IKEA — are showing up says a lot for the city, and bodes well for its future on the commercial side.”