Developers and numbered companies are increasingly the owners of land where Vancouver’s small retailers operate, prompting concern about the health of commercial streets that define the city’s neighbourhoods.
In the first study of its kind, the City of Vancouver is compiling statistics from six commercial areas in Vancouver: West Broadway, East Hastings, Marpole, South Granville, Commercial Drive and Collingwood.
Early results showed rising vacancy rates in some areas and the shift of independent owners to chain stores. But there’s still more work to do, says the city’s acting assistant director of city-wide planning. “We need to know if this is a trend. Vacancy is a complex thing,” Chris Robertson said.
And he said it's a key piece of work for the city.
"We do understand these neighbourhood-serving businesses are important to each and every one of us. This is something that people feel strongly about."
The study showed there has been a 71-per-cent increase in pieces of land owned by developers between 2012 and 2019, from 68 to 116, and a 41-per-cent increase in properties owned by numbered companies, from 54 to 76. Numbered companies are often entities created by a developer prior to moving forward on a project.
Some areas are doing relatively well. Although Commercial Drive saw the number of chain businesses increase to 16 per cent from 9 per cent in the past 15 years, the vacancy rate is almost unchanged and independents still run four-fifths of the shops.
Colllingwood has also maintained a low vacancy rate over the years. But in South Granville, an area known for its upscale shops and art galleries, it grew to 11 per cent from 2 per cent in the past 14 years. However, the business-association director there has said that statistic reflected a short downward blip.
The city's plan to update the statistics that were gathered last April will show if that is true.
The study didn’t cover some notable areas in Vancouver, like downtown Vancouver, where the business association there found in its own study that showed the number of businesses has increased in recent years.
It also didn’t look at West Point Grey, where business-association executive director Aila Karpio said 30 per cent of the businesses closed after Safeway closed its grocery store there two years ago. That property is being held by a major local developer, BentallGreenOak.
The report does not comment on solutions to the problem of land being held for potential development. However, some city councillors have suggested the possibility of an “empty storefront” tax, similar to the city’s vacancy tax on homes.
Mr. Robertson said all ideas are on the table but that "we don't have solutions right now."
He emphasized that the biggest problem most business owners talked about was the current leasing and taxing system, which requires business owners to pay the taxes on the properties they rent, even when the taxes are skyrocketing because of future development potential.
Critics say that a vacant storefront tax could hurt business even more.
Vocal advocates such as business-tax specialist Paul Sullivan say the city has a tool it could use right now – a special tax exemption for specific businesses, groups of businesses, or areas. It would take work, Mr. Sullivan said, because the city would have to define who could get the exemption.
But, he said, neither Vancouver nor any other city wants to use that because officials are afraid of being bombarded with requests and difficult decisions.
Still, Mr. Sullivan noted, “An empty storefront tax is not the answer. Let’s incentivize. Let’s put a threshold on achieving a tax exemption, a local independent business with a city licence.”
Other observers say that the biggest problem for small businesses lies with the province, which has imposed new costs on owners like the employer health tax.
And they said the consequences are starting to show up in other B.C. cities.
“I do believe this issue will continue to fester and grow. It is starting to spread to other municipalities like Victoria and Kelowna,” said Muriel Protzer, a representative of the Canadian Federation of Independent Business.