KingSett Capital is now sole owner of the region’s second-largest shopping mall after purchasing Ivanhoe Cambridge’s 50 per cent stake in the Bayshore Shopping Centre for $193.5-million.
KingSett and Ivanhoe Cambridge were joint owners of the west-end mall, which opened in 1973 and attracted more than eight million visitors a year before the pandemic.
The sale is part of Ivanhoe Cambridge’s “strategic plan” to ensure its real estate portfolio is “well-diversified,” a company spokesperson said in an email to OBJ. Bayshore was the firm’s only Ottawa property.
Cushman & Wakefield has now taken over management of the 880,000-square-foot mall from Ivanhoe Cambridge. KingSett Capital did not immediately respond to requests for comment about the transaction, which closed earlier this summer.
Founded in 2002, KingSett manages nearly $16-billion worth of office, retail, residential, industrial and hotel properties across the country.
Bayshore is KingSett’s sole Ottawa retail holding.
Last year, the firm also presented a proposal to build two rental apartment highrises next to the mall in partnership with Ivanhoe Cambridge. The companies did not immediately respond to requests for an update on the development project Tuesday.
Managing malls 'not easy'
Retail analyst Barry Nabatian said he wasn’t surprised that Ivanhoe Cambridge decided to divest its share of the mall, which completed a $200-million expansion in 2016 and now has about 170 stores.
The Montreal-based company – which manages more than $60-billion in office, residential, retail and industrial properties around the world – has been looking to pare down its retail portfolio for a while, Nabatian noted, and probably felt the time was right to sell Bayshore.
“They have many other things to manage, and shopping mall management is not easy,” he said, citing rising insurance and maintenance costs as well as a sharp drop in consumer traffic during the pandemic as likely factors in Ivanhoe Cambridge’s decision to sell.
COVID-19 has wreaked havoc with the Canadian shopping mall industry, which was already in a spiral before the pandemic.
Online shopping surge
According to research from Deloitte, foot traffic in the country’s Top 10 malls fell more than 20 per cent between 2018 and 2019 and plummeted a whopping 42 per cent between February 2019 and February 2020.
Meanwhile, online shopping has surged, with e-commerce now accounting for one-fifth of all retail spending in Ottawa compared with just five per cent two years ago, according to Nabatian.
But the director of market research at Shore-Tanner & Associates said Bayshore hasn’t been hit as hard by COVID-19 as many other local retail complexes. He cited the west end’s rapid growth, high average incomes and relatively young population as key factors in the mall’s success.
Bayshore’s retailers generated average sales of about $750 per square foot in 2019, second only to the Rideau Centre among Ottawa shopping centres. Nabatian said he expects Bayshore to bounce back to pre-COVID sales levels – and then some – at some point in 2022.
“Give it six months, a year from now, assuming that delta is under control and there is no more bad news coming, I think that they’re going to reach the $900- to $1,000-per-square-foot range,” he said.