Even before the pandemic, main streets faced challenges owing to competition from malls and rising real estate costs. Add the lockdowns, shifts to hybrid work and online shopping and today, nearly every retail block is likely to have at least one vacant storefront.
But with the economy opening up, some experts are saying the tough lessons learned in the past two years may be just what was needed to start up a main street revival.
“COVID could be a positive for small-scale businesses. It is forcing a rethink of the way that people shop and use public space,” says Mary W. Rowe, chief executive officer of the Canadian Urban Institute, which has launched a national campaign called Bring Back Main Street.
Businesses and main streets have been assisted with unprecedented policy changes and large-scale programs, including commercial rent relief, wage subsidies, emergency financing and a wide array of other programs initiated by federal, provincial and city governments, Ms. Rowe says. “Among the bold steps that city governments have taken that would have been difficult to contemplate prepandemic are rapid sidewalk and patio expansions, repurposing of roads, major realignments of services, widespread property tax deferrals and other financial support measures.”
The financial-services companies have been the slowest to return to the office and they are also the largest employers in downtown cores.— Stan Krawitz, vice-chairman of Savills Canada
The definition of main street is not just historic downtown high streets, Ms. Rowe notes. “It can be a strip mall, or four corners with a beloved corner store and restaurant that have attracted other businesses. I think main street is just a code for gathering place, and we want to encourage providing these places the resources to rebuild what local people need and want.”
The lockdowns created an unprecedented sense of urgency, says Rino Bortolin, city councillor for the City of Windsor. “The BIA that represents downtown Windsor was extremely responsive during the pandemic and one of the biggest successes was the way were able to reduce the bureaucratic red tape that had built up over decades.”
For example, in a matter of weeks, they were able to change the complete process in which hospitality outlets could apply for patio licence, Mr. Bortolin points out.
“That may not be a big deal in the private sector, but in the public sector that is a game changer, and it helped many restaurants expand their clientele.”
There’s still a lot of work to do, as debt accumulated during the shutdowns threatens business survival. More than 40 per cent of Canadian restaurants could not pay October rent in full and on time.
That’s up from 38 per cent in September and 32 per cent in August, according to a survey of 3,181 small business owners conducted by Alignable, an online referral network for small businesses. It found that 33 per cent of retailers and 47 per cent of beauty salons have also fallen behind on rent.
A big factor is the continued lack of foot traffic in retail districts as many people continue to work from home and shop online, says Frank Magliocco, national real estate leader for PwC Canada. However, as the economy begins to rebound, foot traffic will likely increase, he adds.
A new PwC Consumer Insights survey found that Canadians want great in-store experiences again and will be actively seeking them.
Some retail landlords are accelerating efforts to evolve their properties by seeking zoning changes to incorporate other uses into the mix, such as condominiums or multifamily rentals in place of parking lots, which will provide more local customers for retailers, Mr. Magliocco adds.
Financial cores remain a challenge. “First and foremost, the financial institutions have to go back to work, and that one change will see at least a 50-per-cent improvement in the viability of downtown retail in major cities across Canada,” says Stan Krawitz, vice-chairman of Savills Canada. “It’s the financial-services companies that have been the slowest to return to the office and they are also the largest employers in downtown cores.”
There is also a fall-off of retail along the high streets, but these are often fashion retailers affected by the fact that many shoppers have turned to e-commerce, he says. “The successful retailers will have to adopt a hybrid model that includes e-commerce and create incredible experiences to lure customers back into the physical store.”
The best examples are the high-end fashion retailers in Toronto’s Yorkville, and while there are vacancies, the stores that survived have incorporated “wow factors, the newest, the latest, the greatest on display,” Mr. Krawitz says. “They’ve introduced different types of music and design, kept up with pop culture and made it interesting for their clients, particularly the younger generation who are most apt to go into the stores.”
The pandemic’s disruptions of workplaces also appear to be stimulating entrepreneurial spirit, says Linda Farha, founder of pop-upgo.com, which arranges short-term leases of vacant store space. She says inquiries from startups as well as landlords and brands have accelerated in recent months.
“With the holidays coming up people are shopping earlier than they normally would, so retailers and brands are trying to establish a presence earlier,” Ms. Farha says. “There’s still a bit of hesitancy because no one is certain if there’s going to be another lockdown but what we’re seeing is that people are attracted to physical shopping, specifically pop-ups. And the millennials, who are most people’s targets these days, don’t want to buy online – they want to see and experience before they buy.”
Not only do pop-ups reanimate vacant space, but if they succeed, they may become permanent tenants, she adds.
A resurgence in demand after a series of restrictions and lockdowns and nightly curfews is already apparent on the main streets of Montreal, says Luciano D’Iorio, regional president of commercial real estate brokerage firm, CDNGlobal Québec.
Montreal retail sales increased by 22 per cent to date this year as compared with 2020 and more than 5 per cent compared with prepandemic 2019, according to recent data from StatsCan and CoStar.
“Following the pandemic, the need for merchants and business associations is even higher because programming and activities that bring people back are in high demand – everything from parades and festivals to sidewalk sales,” he says.
This is working in Montreal.
“Along St. Catherine Street, between St. Urbain and Atwater Streets, you’re looking at an 11-per-cent vacancy rate. That compares very well with other major shopping streets across North America. I have seen stats in New York that show Fifth Avenue at 26 per cent vacancy and Times Square at 31 per cent.”
Since September, the return of in-person classes at Concordia and McGill universities, both located downtown, have added thousands of pedestrians to the core and merchants around the schools are starting to recover.
Currently, there is still about 55 per cent of office employees working from home, leaving 45 per cent actually heading into a commercial setting,” Mr. D’Iorio says. “Now we need to work on getting those numbers up. Additionally, the missing piece for a resurgence in foot traffic at a shopping destination like St. Catherine Street West is still tourism, and hopefully we can make that happen.”
“We are in an interesting moment that is forcing a rethink of the way people shop and use public space,” Ms. Rowe says. “I think we’re going to see more cultural spaces evolve and smaller-scale businesses that make a neighbourhood more complete. I also expect some vendors will share spaces, so they don’t need to have their own storefront.”
The more appealing and mixed-use a neighbourhood is, the more resilient it will be, she adds. “I don’t think anybody has any idea yet what is going to catalyze from this experience.”