Ottawa's mid-tier malls face adapt-or-die retail landscape

Beth
Beth Nagy, co-owner of the former P.A.M.’s Coffee and Tea franchise in the Lincoln Fields Shopping Centre, says she’s not sure what her business future holds. Photo by Mark Holleron

This article originally appeared in the August edition of the OBJ newsmagazine.

On a warm, sunny morning in late July, Beth Nagy looks out at the deserted rows of seats near her coffee shop in the Lincoln Fields Shopping Centre and reminisces about the good old days of Ottawa retail.

That would be back around 2010, when Nagy and her husband Charles owned as many as four P.A.M.’s Coffee and Tea franchises ​– three in the capital and one in Arnprior. But on this day, with the clock running out on summer and fall looming ever closer, the longtime businesswoman is doing a countdown of her own to the moment she closes the cash register at a P.A.M.’s for the final time.

Nagy’s lease on her kiosk at the west-end shopping plaza, like the other few remaining store owners at Lincoln Fields, was set to expire in a matter of days. The mall’s owner, RioCan, gave notice to all tenants back in January that they would have to vacate the building by July 31 as part of the company’s plan to tear down the aging plaza and replace it with a mixed-use development that will be home to a new retail complex and could eventually include highrise residential towers.

So after 16 years, Nagy is saying goodbye to her last P.A.M.’s location, a parting she calls “bittersweet.”

“It would have been nice to go out on our own terms,” she says.

Lincoln Fields is just one of many mid-sized community shopping centres across the country that have struggled to adapt to changing consumer habits and the rise of online commerce. 

In the face of those challenges, business owners and industry experts say smaller retailers in smaller plazas can still thrive – provided they find a unique niche that draws customers from a wider area or they get a spillover benefit from new anchor tenants that are introduced as malls are redeveloped. 

Located on 16 acres of prime real estate on Carling Avenue, Lincoln Fields once had dozens of tenants, buoyed by household names such as Loblaws, Woolco and Walmart. 

The hollowing-out actually started decades ago, when Loblaws departed in 1984. Long-defunct Woolco was replaced by Walmart in 1994, but the discount retail behemoth also eventually left, pulling up stakes in 2016 and leaving 120,000 square feet of space that remained vacant right up to the mall’s last day.

“Bloop, bloop, bloop, bloop, bloop – into the toilet,” is how Nagy describes the mall’s sales trajectory since she opened shop in 2003. Her revenues have plummeted 50 per cent over that time span, she says, lamenting the loss of major tenants that also included a large branch of the Canadian Automobile Association.

“When that left, that was a big hit,” she says, surveying the walls of locked-up storefronts around her that have already been vacated. “It all has a huge impact on business in a very negative way.”

It’s a trend Ottawa retail analyst Barry Nabatian has seen repeating itself over and over again across the capital and other Canadian cities. 

What Nabatian calls second-tier shopping centres such as Lincoln Fields, Billings Bridge, Carlingwood, Elmvale Acres and Westgate are “struggling,” he says. Many of today’s consumers flock to big-box retailers that have the buying power to charge lower prices, he explains, while well-to-do households are turning to chic new retailers such as Quebec-based clothier Simons and upscale jewelry merchant Tiffany that have opened Ottawa locations in bigger shopping malls with more traffic. 

More and more, that’s leaving mid-level retailers that were the bread and butter of the second-tier malls on the outside looking in, he argues.

“The two extremes are doing well, and the middle is constantly losing and being emptied out,” he says, noting that the city’s overall retail vacancy rate has jumped from four to six per cent over the past three years, while overall retail sales per square foot have declined from $480 in 2016 to around $420 today.

“(Community malls) are doing their best, but it’s just not working,” says Nabatian, a researcher at Shore-Tanner & Associates. “The traffic in these shopping centres is low. The best thing for a retailer is to be exposed to as many people as possible, regardless of whether they buy that day or not. Once they are there, they tend to shop at other stores as well.”

Nagy
Beth Nagy pours coffee at P.A.M.’s Coffee and Tea in Lincoln Fields Shopping Centre before the mall closed at the end of July. Photo by Mark Holleron

New Canadian Tire

Down the road from Lincoln Fields at Carlingwood Shopping Centre, management would not reveal the mall’s vacancy rate or sales per square foot. But some store owners there say they’ve also witnessed a significant decline in foot traffic at the 525,000-square-foot plaza. 

Sears, the mall’s key anchor tenant, declared bankruptcy in 2017 and closed its Carlingwood store the following January. Mall operator Cushman and Wakefield demolished the former department store earlier this year and announced a Canadian Tire outlet would be built in its place.

Vicky Maguire, who owns women’s hat and fashion retailer Unique Accessories with her husband Brian, has been a tenant of the mall for 13 years and says she’s seen “a lot of turnover” during that time. 

The closure of Sears “has made a big difference to a lot of people,” she adds, estimating her sales are down 20 per cent compared with a year ago. “This has been the slowest year for me, but we are a destination store. We’re lucky in that respect.”

Maguire says the business, which employs four part-time staff members, is still profitable and she expects it to remain viable for the foreseeable future.

“We’re not sure how long we wish to carry on anyway,” she says, noting she and her husband are both in their seventies. “But I think once Canadian Tire comes in, I really think that will do great things for the mall.”

At Carlingwood’s Sunrise Records store manager Dan Ferguson echoes that optimism. 

“I would say with the Canadian Tire coming in, we’re going to see a lot more traffic through here for sure,” Ferguson says, noting sales at his store have actually risen in the past 12 months.

“A lot of people like to come out and actually touch and look at the product. It’s right in their hands immediately.”

At the same time, he also notes that a nearby sandwich shop and the Carlingwood Restaurant, a fixture in the mall for decades, both recently shut their doors.

“I think it just depends on the product really,” he says of the long-term future of stores in the 110-store plaza, which opened in 1956 and is one of Ottawa’s oldest malls.

Nabatian says there’s really not much that individual merchants can do to reverse their declining fortunes. Traditional advertising isn’t as effective as it used to be, he says, and other promotional efforts such as sponsoring community sports teams can bring customers back, but “it’s very expensive.”

Finding a niche

Louise Kekanovich, who owns Buster’s Bar and Grill at Lincoln Heights with husband Steve Schwan, says business at her 200-seat restaurant has grown steadily during its 10 years in operation. She and Schwan are now planning to reopen their establishment at a new, larger location on Hazeldean Road in Kanata, adding she’s “very excited” about the move.

Kekanovich says brick-and-mortar retailers need to find a way to stand apart from the crowd. 

In her case, that’s meant cultivating “loyal” regulars from across the city who come for the food, laid-back atmosphere and entertainment such as live bands on the weekend. Many of them have already assured her she’ll soon be seeing them in Kanata. 

“You have to look at ways to bring in customers,” she says. “They’re just not coming in to have food. They’re coming in for that experience.” 

Faced with a need to reinvent their properties, shopping centre owners are increasingly following the U.S. trend of redeveloping their current properties into mixed-use projects that combine commercial and residential elements. Proponents say it’s a way to generate new income from large swaths of land devoted to parking lots that now often sit half-empty at many mid-sized malls.

"I really don't think I would ever go into a shopping centre (again)."

RioCan has jumped on the redevelopment bandwagon in a big way. In addition to its plans to tear down Lincoln Fields and rebuild it, the mall owner is also looking at erecting as many as five mixed-use towers beside the Westgate shopping centre that would feature retail space and hundreds of residential units. In addition, it’s proposing a major makeover of Elmvale Acres Shopping Centre that would see as many as seven new buildings with nearly 600 residential units added to the St. Laurent Boulevard site.

RioCan chief executive Jonathan Gitlin recently told OBJ that although its retail properties are still thriving, with a 97 per cent overall occupancy rate across Canada, the company can’t afford to get complacent. Redeveloping its malls is just one component of its long-term strategy to reinvent itself, he added.

He said the firm, which owns about 44 million square feet of retail space across Canada, is looking to add more “service-related” businesses such as gyms and doctor’s offices to its tenant mix as a way to attract customers.

“I think we’re doing a number of things to ensure that we have relevant retail,” he said. “One of those is changing the types of tenants that we have in our buildings. Part of is building mixed-use (developments), where we urbanize, modernize and bring residential (units) to our retail sites.”

Nabatian is a fan of RioCan’s new approach.

“The best solution for them ... is to have highrise rentals, even sometimes condominiums, as close to the shopping centres as possible,” he says.

Back at Lincoln Fields, Nagy says she isn’t sure exactly what her future holds. But she’s almost certain that whatever her next venture is, it won’t be based at a mall. 

“I’m taking a break now,” she says. “I really don’t think I would ever go into a shopping centre (again).”