As the city considers Lansdowne 2.0, some local market watchers say the needed success of retail is impeded by population and transportation.
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The success of retail might be essential to the success of Lansdowne 2.0, but some local market watchers argue that population and transportation challenges might make it difficult for the site to generate the retail revenue it needs.
Earlier this month, the city and the Ottawa Sports and Entertainment Group (OSEG), released an updated proposal for the second stage of development at Lansdowne Park. Despite significant cuts to housing and retail space, the project’s price tag jumped from $332 million to $419.5 million.
In a 218-page report, city staff described the importance of retail to Lansdowne’s overall success, writing, “Retail is critical to the affordability of the overall partnership and the business case for redevelopment.”
Ian Lee, associate professor at Carleton University’s Sprott School of Business, argues that it is challenging to make retail successful at the Lansdowne site.
“I argued then and consistently until now that retail is going to be unsustainable because there is not enough people in the Glebe to support retail,” he said. “The answer at the time was repeatedly, ‘Don’t worry, we’re building something so unique that people will come from across the city.’”
Lee cites Lansdowne’s geography, which includes Highway 417 to the north and Bronson Avenue to the West, as well as the Rideau River and Queen Elizabeth Driveway. These physical barriers, paired with the fact that the area only has one main arterial road, make the site difficult to access, Lee said.
While retail has been a money-maker at Lansdowne to date, it has not been without challenges. Major tenants, including PetSmart and the Bank of Montreal, have vacated their Lansdowne storefronts. If the Lansdowne 2.0 proposal goes through, the temporary loss of retail space during construction could lead to a $600,000 shortfall in retail revenues.
According to Lee, the site’s physical limitations make it impossible to bring in enough traffic to make retail on the site financially viable.
“The retail will always fail because it’s too difficult for the people who live in the city of Ottawa who do not live in the Glebe to get into the Glebe,” he said. “Some will come for special events, like a football game, but they won’t come day after day, week after week, 52 weeks of the year.”
Lee argues that it’s time to pump the brakes on the project.
“There’s an old saying: ‘You don’t throw good money after bad money,’” he said. “If you have an investment and it’s not working, you don’t go and throw more money at it just because it’s failing. And that’s really the argument that the city’s put forward. You’ve got to put in another $400 million or we’re going to lose all that investment we’ve already made. That’s the sunk cost fallacy.”
With the possibility that the Ottawa Senators might move to a new hockey arena in the downtown core, Lee said he’d like to see the Lansdowne project put on hold so the city can focus on a sporting facility with access to the things Lansdowne will always lack: rapid transit, parking and a bigger local population.
“That $400 million is scarce money that the City of Ottawa desperately needs to renovate the downtown and that won’t be cheap,” he said. “I don’t think they really understood the enormous physical barriers, and thus psychological barriers, (for Lansdowne). People are not driving in from the suburbs. Incredible barriers exist and they will never go away. That’s just the reality.”
Retail analyst Barry Nabatian, director of the real estate company Shore-Tanner & Associates, said that, generally, retailers in shopping centres that are difficult to access struggle to find success.
“The problem is transportation,” he said. “It’s not easy to get there. Let’s say you live in Vanier. You had to take two buses just to get there.”
According to Nabatian, shopping centres require a large local population within walking distance in order to be financially successful. Without that, he said there either needs to be plentiful parking, or accessible transportation to attract people from farther away.
“People have many choices and, if it’s not convenient, they just won’t go,” he said.
Since the pandemic, Nabatian said that retailers across the city have taken a hit, as more customers cut back on spending and turn to the convenience of online shopping.
“They’re spending less money per person not only on food, but also on a number of other things, like entertainment, concerts or sports,” he said. “People are cutting back on all of those. We are very close to having that recession that people are talking about.”
In terms of Lansdowne, Nabatian said it’s difficult to know how well its retailers are doing on the site without viewing financial reports. However, he said there are some positives on the horizon. More sporting and cultural activity, for example, means more foot traffic, which is especially good for businesses.
“There’s going to be a lot more events,” he said. “Those are the ones that would make or break it. Anyone who goes for sports or entertainment, when they go they usually spend a lot of time drinking and eating.”
