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I hate to say "I told you so," but...
13 July 2010
Remember back in 2007 when the consultant who prepared our commercial review told us this area (our town, our neighbours and our visitors) could easily support another 500-600,000 sq. feet of commercial sprawl development on the west edge of town? And the majority of council nodded their heads in agreement like dashboard bobbin heads?
I contested that. Back then I posted about the over-crowding of retail in the community, and what I saw as numbers skewed to justify the additional development (posts September, November and December, 2007 and June, 2008). When I analyzed the consultant's numbers, I arrived at rather different conclusions.
Well this week, a different consultant told us that the region actually has more retail space than our population could support. Seventy three more stores than the provincial average would suggest, to be exact (for the region including Clearview, Collingwood, Blue Mountain and Wasaga Beach - the study actually says Collingwood has 93 more stores than the provincial average suggests it needs or can support, but the deficits in Blue Mountain and Wasaga Beach make it a regional excess of 73).
Seems like Councillor Foley and I might have been right all along. But, as the mayor has frequently reminded everyone, I'm not an expert.
It's an old argument, not native to Collingwood. Consultants everywhere have often used data to justify more mall sprawl and more franchise outlets that often kill downtowns, small independent retaillers and family-run restaurants. It's as if we all had to have the full slate of cookie-cutter, national-brand outlets selling Chinese-made goods and pre-cooked, dishes to be a mature community - and to hell with any local character and identity.
Yes, you can justify this, it seems. It's all in the way you present the data (read How to Lie with Statistics and Freakonomics for an enjoyable discussion on this).
You can say this region has a catchment population of 100,000 and simply pretend they are all potential shoppers - as long as you avoid geography (the fact that at least half of that group live closer to another mall or big box outlet elsewhere), the presence of competition (why would anyone in Wasaga Beach, for example, drive to shop at, say, Collingwood's Wal-Mart when they have a bigger, newer Wal-Mart closer to them?) and the demographics of potential shoppers (with a higher-than-average percentage of seniors - 21% regionally compared with 14% provincially - how many teen-oriented Suzy Sheers, FCUKs and Blue Notes can a small town support?). Or you can just use raw population figures with no reference to cost of living, taxes, utility costs, housing costs and income.
There are lots of studies about what amount of retail floor space per capita is and isn't viable. But on average, in North America urban centres tend to have lots of it: 40-plus sq. ft of retail space per person (up to 75 in a few places in the USA). Smaller centres have less: 20-25 sq. ft. a figure that seems to hold in Canada too (up from around 13.5 sq. ft on average across Canada in 2003). The USA has almost ten times the amount of retail space it had in 1960.
Europe in general has much less - considerably less than half what we have here in most nations (The UK has, for example, 2.5 and seems to have ample shopping for everyone).
Collingwood has about 40, according to our newest experts, up there with major urban areas like Edmonton. Of the 406 retail outlets in the region, more than half of them (206) are in Collingwood.
On the plus side, Collingwood's retail sales are $501 million, double the provincial per-capita average. Fully 15% of that is in groceries, and 16% in used and new cars. There's nothing in the study to indicate a demand for more of the same sort of outlets, here or to tell us what the breaking point is (will another car dealership, for exampl, increase local sales or merely siphon off part of the existing amount?).
According to this new report, we already have more than enough retail space to satisfy everyone.*
Of the 19,000 jobs in the region, more than a quarter are in either retail or hospitality (food and accommodation) sectors - both sectors known for their low wages and minimal benefits. I'm pretty sure they're not the big retail spenders. ** Interestingly, between 2001 and 2006, only 30 new jobs were created regionally in retail compared withn 655 in hospitality (we also lost more than 1,000 manufacturing jobs in that time). That suggests existing retail isn't growing much, if any.
And not to put too fine a point on it, but according to the Ontario government statistics, retail sales, family income and personal consumption in the province have been dwindling steadily since 1995. Despite this 15-year trend, the provincial government blithely predicts an upsurge in both in the near future, until 2019, when they fall again. An interesting - possibly psychedelic - optimism that runs counter to all the data (and a prediction that seems to ignore the deleterious effect paying the additional 8% HST on many previously untaxed items will have on our spending habits).
So it seems that we are already over-saturated with retail here, and it would be an unwise and unsustainable decision to add another 500,000 or so sq. ft. of retail space into a mall on the west end of town.
I told you so.
~~~~~
* Don't take my word for it. Just search online and read the data yourself. Here are a few tidbits to get you started:
From Costar Group:
RETAIL SPACE PER CAPITA
Because readers have demanded it, CoStar Advisor brings you current retail space per capita trends this quarter. Keep in mind the latest population statistics are from the U.S. Census Bureau's 2007 population estimate. Aggregating the 59 major markets CoStar tracks in its national retail report; there was 8.26 billion square feet of retail space existing at the close of third quarter. Across those 59 markets, the estimated weighted average retail space per capita figure is 43.71 square feet of retail space per capita in those markets. This is up from a ratio of 43.03 square feet of retail space per capita in third quarter 2007.
The 10 markets with the most retail space per capita include Southwest Florida (74.12 sq. ft.), Richmond (68.2 sq. ft.), Greensboro/Winston-Salem (66.11 sq. ft.), Greenville/Spartanburg (65.96 sq. ft.), Tulsa (65.52 sq. ft.), Oklahoma City (65.35 sq. ft.), Toledo (65.06 sq. ft.), San Antonio (60.51 sq. ft.), Jacksonville (60.02 sq. ft.), and Birmingham (59.94 sq. ft.).
The 10 markets with the least retail space per capita include Long Island (22.11 sq. ft.), Charlotte (22.52 sq. ft.), Portland (27.95 sq. ft.), Westchester/So. Connecticut (32.44 sq. ft.), Detroit (32.83 sq. ft.), Northern NJ (33.93 sq. ft.), Washington D.C. (34.23 sq. ft.), Los Angeles (34.66 sq. ft.), Kansas City (35.77 sq. ft.) and Philadelphia (37.52 sq. ft.).
From New Rules:
Between 1990 and 2005, the amount of retail space per capita in the U.S. doubled, from 19 to 38 square feet. In contrast, European countries generally have less than 10 square feet per person.
This level of expansion has not been supported by population and income growth. Since the early 1990s, per capita retail spending, adjusted for inflation, has increased by only about 14 percent.
Riocan, one of the largest mall developers, noted in a recent presentation to shareholders that mall space in Canada is, on average, 12.5 sq. ft per person, compared with 20.2 sq. ft per person in the USA.
See also the CARD retail sales data for 2007.
The USA has suffered from the excessive retail growth. In 2008, according to Newrules.org, more than 6,500 retail chain outlets were scheduled for closing by year's end and "vacancy rates at strip malls have reached a twelve-year high." At the same time, "shopping center construction continues at a furious pace. Developers are on track to bring an estimated 137 million square feet of new retail space online this year. That's more than the average annual growth during the first half of the decade... Communities that have not taken steps to limit retail sprawl through their land use policies are at risk of seeing growing numbers of buildings become derelict." (emphasis added)
Here's a telling comment: "Between 1990 and 2005, the amount of retail space per capita in the U.S. doubled, from 19 to 38 square feet. In contrast, European countries generally have less than 10 square feet per person. This level of expansion has not been supported by population and income growth. Since the early 1990s, per capita retail spending, adjusted for inflation, has increased by only about 14 percent."
Consumer spending in Canada remains stagnant. According to a story on CNW:
Despite a surge in confidence in the economic growth of the country, consumer spending will not reflect that newfound confidence in 2010, according to Bensimon Byrne's latest Consumerology Report, released today.
...despite increased optimism about the economy, large personal debt will severely limit Canadians' ability to return to pre-recession spending levels... our survey shows that the culture of thrift and frugality that developed during the recession persists among Canadians of all income levels.
...many Canadians remain burdened with personal debt and have been impacted in ways that will have long-term implications... more than one third of Canadians are so loaded down by non-mortgage debt that it will take three years or more to pay it down and over 60 per cent of Canadians would put extra spending money into paying down debt rather than investing, saving or making a major purchase.
Despite high levels of optimism about the economy, the culture remains one of thrift and frugality, not spending and extravagance. Compared to a year ago, 65 per cent of Canadians report that they are doing more saving and less spending due mostly to large personal debt. Very few Canadians believe it is a good time for them to make a major purchase and 75 per cent report that they will lower their overall monthly discretionary spending this year. A remarkable 92 per cent of Canadians are considering "need" over "want" when it comes to spending, and most Canadians report that their spending remains much lower than it was a few years ago.
** And don't get me started on our deficits in affordable rental housing that we desperately need to keep those retail and hospitality sector workers living here.
I contested that. Back then I posted about the over-crowding of retail in the community, and what I saw as numbers skewed to justify the additional development (posts September, November and December, 2007 and June, 2008). When I analyzed the consultant's numbers, I arrived at rather different conclusions.
Well this week, a different consultant told us that the region actually has more retail space than our population could support. Seventy three more stores than the provincial average would suggest, to be exact (for the region including Clearview, Collingwood, Blue Mountain and Wasaga Beach - the study actually says Collingwood has 93 more stores than the provincial average suggests it needs or can support, but the deficits in Blue Mountain and Wasaga Beach make it a regional excess of 73).
Seems like Councillor Foley and I might have been right all along. But, as the mayor has frequently reminded everyone, I'm not an expert.
It's an old argument, not native to Collingwood. Consultants everywhere have often used data to justify more mall sprawl and more franchise outlets that often kill downtowns, small independent retaillers and family-run restaurants. It's as if we all had to have the full slate of cookie-cutter, national-brand outlets selling Chinese-made goods and pre-cooked, dishes to be a mature community - and to hell with any local character and identity.
Yes, you can justify this, it seems. It's all in the way you present the data (read How to Lie with Statistics and Freakonomics for an enjoyable discussion on this).
You can say this region has a catchment population of 100,000 and simply pretend they are all potential shoppers - as long as you avoid geography (the fact that at least half of that group live closer to another mall or big box outlet elsewhere), the presence of competition (why would anyone in Wasaga Beach, for example, drive to shop at, say, Collingwood's Wal-Mart when they have a bigger, newer Wal-Mart closer to them?) and the demographics of potential shoppers (with a higher-than-average percentage of seniors - 21% regionally compared with 14% provincially - how many teen-oriented Suzy Sheers, FCUKs and Blue Notes can a small town support?). Or you can just use raw population figures with no reference to cost of living, taxes, utility costs, housing costs and income.
There are lots of studies about what amount of retail floor space per capita is and isn't viable. But on average, in North America urban centres tend to have lots of it: 40-plus sq. ft of retail space per person (up to 75 in a few places in the USA). Smaller centres have less: 20-25 sq. ft. a figure that seems to hold in Canada too (up from around 13.5 sq. ft on average across Canada in 2003). The USA has almost ten times the amount of retail space it had in 1960.
Europe in general has much less - considerably less than half what we have here in most nations (The UK has, for example, 2.5 and seems to have ample shopping for everyone).
Collingwood has about 40, according to our newest experts, up there with major urban areas like Edmonton. Of the 406 retail outlets in the region, more than half of them (206) are in Collingwood.
On the plus side, Collingwood's retail sales are $501 million, double the provincial per-capita average. Fully 15% of that is in groceries, and 16% in used and new cars. There's nothing in the study to indicate a demand for more of the same sort of outlets, here or to tell us what the breaking point is (will another car dealership, for exampl, increase local sales or merely siphon off part of the existing amount?).
According to this new report, we already have more than enough retail space to satisfy everyone.*
Of the 19,000 jobs in the region, more than a quarter are in either retail or hospitality (food and accommodation) sectors - both sectors known for their low wages and minimal benefits. I'm pretty sure they're not the big retail spenders. ** Interestingly, between 2001 and 2006, only 30 new jobs were created regionally in retail compared withn 655 in hospitality (we also lost more than 1,000 manufacturing jobs in that time). That suggests existing retail isn't growing much, if any.
And not to put too fine a point on it, but according to the Ontario government statistics, retail sales, family income and personal consumption in the province have been dwindling steadily since 1995. Despite this 15-year trend, the provincial government blithely predicts an upsurge in both in the near future, until 2019, when they fall again. An interesting - possibly psychedelic - optimism that runs counter to all the data (and a prediction that seems to ignore the deleterious effect paying the additional 8% HST on many previously untaxed items will have on our spending habits).
So it seems that we are already over-saturated with retail here, and it would be an unwise and unsustainable decision to add another 500,000 or so sq. ft. of retail space into a mall on the west end of town.
I told you so.
~~~~~
* Don't take my word for it. Just search online and read the data yourself. Here are a few tidbits to get you started:
From Costar Group:
RETAIL SPACE PER CAPITA
Because readers have demanded it, CoStar Advisor brings you current retail space per capita trends this quarter. Keep in mind the latest population statistics are from the U.S. Census Bureau's 2007 population estimate. Aggregating the 59 major markets CoStar tracks in its national retail report; there was 8.26 billion square feet of retail space existing at the close of third quarter. Across those 59 markets, the estimated weighted average retail space per capita figure is 43.71 square feet of retail space per capita in those markets. This is up from a ratio of 43.03 square feet of retail space per capita in third quarter 2007.
The 10 markets with the most retail space per capita include Southwest Florida (74.12 sq. ft.), Richmond (68.2 sq. ft.), Greensboro/Winston-Salem (66.11 sq. ft.), Greenville/Spartanburg (65.96 sq. ft.), Tulsa (65.52 sq. ft.), Oklahoma City (65.35 sq. ft.), Toledo (65.06 sq. ft.), San Antonio (60.51 sq. ft.), Jacksonville (60.02 sq. ft.), and Birmingham (59.94 sq. ft.).
The 10 markets with the least retail space per capita include Long Island (22.11 sq. ft.), Charlotte (22.52 sq. ft.), Portland (27.95 sq. ft.), Westchester/So. Connecticut (32.44 sq. ft.), Detroit (32.83 sq. ft.), Northern NJ (33.93 sq. ft.), Washington D.C. (34.23 sq. ft.), Los Angeles (34.66 sq. ft.), Kansas City (35.77 sq. ft.) and Philadelphia (37.52 sq. ft.).
From New Rules:
Between 1990 and 2005, the amount of retail space per capita in the U.S. doubled, from 19 to 38 square feet. In contrast, European countries generally have less than 10 square feet per person.
This level of expansion has not been supported by population and income growth. Since the early 1990s, per capita retail spending, adjusted for inflation, has increased by only about 14 percent.
Riocan, one of the largest mall developers, noted in a recent presentation to shareholders that mall space in Canada is, on average, 12.5 sq. ft per person, compared with 20.2 sq. ft per person in the USA.
See also the CARD retail sales data for 2007.
The USA has suffered from the excessive retail growth. In 2008, according to Newrules.org, more than 6,500 retail chain outlets were scheduled for closing by year's end and "vacancy rates at strip malls have reached a twelve-year high." At the same time, "shopping center construction continues at a furious pace. Developers are on track to bring an estimated 137 million square feet of new retail space online this year. That's more than the average annual growth during the first half of the decade... Communities that have not taken steps to limit retail sprawl through their land use policies are at risk of seeing growing numbers of buildings become derelict." (emphasis added)
Here's a telling comment: "Between 1990 and 2005, the amount of retail space per capita in the U.S. doubled, from 19 to 38 square feet. In contrast, European countries generally have less than 10 square feet per person. This level of expansion has not been supported by population and income growth. Since the early 1990s, per capita retail spending, adjusted for inflation, has increased by only about 14 percent."
Consumer spending in Canada remains stagnant. According to a story on CNW:
Despite a surge in confidence in the economic growth of the country, consumer spending will not reflect that newfound confidence in 2010, according to Bensimon Byrne's latest Consumerology Report, released today.
...despite increased optimism about the economy, large personal debt will severely limit Canadians' ability to return to pre-recession spending levels... our survey shows that the culture of thrift and frugality that developed during the recession persists among Canadians of all income levels.
...many Canadians remain burdened with personal debt and have been impacted in ways that will have long-term implications... more than one third of Canadians are so loaded down by non-mortgage debt that it will take three years or more to pay it down and over 60 per cent of Canadians would put extra spending money into paying down debt rather than investing, saving or making a major purchase.
Despite high levels of optimism about the economy, the culture remains one of thrift and frugality, not spending and extravagance. Compared to a year ago, 65 per cent of Canadians report that they are doing more saving and less spending due mostly to large personal debt. Very few Canadians believe it is a good time for them to make a major purchase and 75 per cent report that they will lower their overall monthly discretionary spending this year. A remarkable 92 per cent of Canadians are considering "need" over "want" when it comes to spending, and most Canadians report that their spending remains much lower than it was a few years ago.
** And don't get me started on our deficits in affordable rental housing that we desperately need to keep those retail and hospitality sector workers living here.
