Shopping Center Business

DEC 2017

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

Issue link: http://shoppingcenterbusiness.epubxp.com/i/903727

Contents of this Issue

Navigation

Page 112 of 142

CANADA 108 • SHOPPING CENTER BUSINESS • December 2017 A s a retail tenant representative in commercial lease trans- actions, I have worked with regional, national and international retail brands – both as their broker of record and as a consultant. I have had a unique perspective on the Canadian real estate marketplace. I have been a part of established U.S. brands expanding north of the border, and I have seen Canadian retailers like Freshii working to establish a market presence in the United States. The Canadian market is in an inter- esting position relative to our Amer- ican counterparts. Canadian retailers face some of the same big-picture challenges impacting the U.S. retail community, such as increasing com- petition from online retailers and the growing pains associated with moving to a multichannel retail model. But there are important and potentially profound differences, as well. For retailers looking to move across the border in either direction, understand- ing the nuances of those differences is essential. STATING YOUR BUSINESS Freshii, a Toronto-based healthy fast- food concept, has been expanding ag- gressively in the U.S. The chain has more than 230 Canadian locations and approx- imately 100 in the United States, and it is clear that the United States is playing a significant role in the company's future growth plans. Is Freshii unique? Or are there more opportunities for Canadian brands and businesses to make a signifi- cant impact in the United States? One aspect of Freshii's U.S. expansion worth noting is that, as it has expanded in the United States, the company has main- tained its headquarters in Canada. That is beneficial to the bottom line because while Freshii is incurring corporate costs in Canadian dollars (CAD), the company is fortifying its revenue stream south of the border with U.S. dollars (USD). This situation helps the firm keep its cost base down (albeit somewhat arti- ficially) compared with companies that are based solely in the United States. This small boost can give Canadian brands like Freshii just the competitive advantage they need coming out of the gate. When the majority of your future growth poten- tial is in USD and your cost base remains largely in CAD, that is also attractive to investors — especially in public-company environments, where aggressive growth projections and the meeting of quarterly financial targets are so critical. The good news for Ca- nadian brands is that the U.S. business cli- mate is, com- paratively, very retail-friendly. From tax con- s i d e r a t i o n s to permitting processes to dealing with la- bor issues, the United States is a great place to do business. To some extent, the significant U.S.-market growth opportunities for Canadian brands rep- resent simple math: the American mar- ket just has more consumers and more density. To put the population disparity into perspective, consider the fact that there are as many people in the state of Califor- nia as there are in all of Canada. Taking full advantage of those scaled-up expan- sion possibilities means that Canadian re- tailers need to take the time to understand the unique nuances that can vary tremen- dously from one U.S. market to another. For example, there are very different costs, challenges and opportunities in San Diego than in Raleigh, North Caroli- na. Rental rates, vacancy rates, barriers to competition, civic processes for permit- ting and approvals and other regulatory hurdles can be radically different from one municipality to another. For a Cana- dian retailer, there is a learning curve that has to be navigated before its brand can successfully penetrate and take full advan- tage of a new U.S. market. CANUCK OPENER What about the opportunity for U.S. companies to expand to Canada? Can- Turning Over A New Leaf U.S. firms looking to enter new markets can learn from cross-border trends in Canadian retail real estate. Jason Schouten Jason Schouten Principal Avison Young For brands that are accustomed to only operating in English, expanding into a bilingual country — and modifying all labels, advertising and signage to include both English and French — is a very real challenge.

Articles in this issue

Archives of this issue

view archives of Shopping Center Business - DEC 2017