Primaris Real Estate Investment Trust owns the Cataraqui Centre in Kingston, Ontario. Today, it is charting a new course following the recent transfer of key real-estate assets formerly owned by Hudson’s Bay. The retail environment is changing fast, and dramatic shifts are taking shape. Combined with the return of these five properties, Primaris foresees a loss of an estimated annual revenue of $5.5 million. Together, these sites add up to an impressive 532,100 square feet. Repurposing and redeveloping them will require a significant investment, around $50 million to $60 million.
The move follows Primaris’ loss of nine of its own properties used by Hudson’s Bay. The remaining five, now back in the hands of Primaris, present both challenges and opportunities in a changing retail environment. Alex Avery, Chief Executive of Primaris Real Estate Investment Trust, recognizes the intricacies that go into repurposing these spaces.
There are incredible opportunities just waiting to be. Avery, in a statement. They do so at a considerable price point for the private landlord, showcasing the financial burdens of the redevelopment campaign.
The consumer-facing retail market is undergoing some profound and rapid shifts. Industry observers are finding it harder and harder to backfill big box department stores like those formerly occupied by Hudson’s Bay. We talked with commercial real estate expert Camenzuli about what’s behind this important market paradigm shift. He continues, “Backfilling all of the department stores with other department stores is over.” Indeed, this comment mirrors a larger movement inside of retail, where smaller, more adaptable footprints are increasingly more valuable.
Camenzuli stressed the incredible space need. He had it pegged as 6,000 to 7,000 square feet or less. He cautioned that finding tenants for larger spaces can be more difficult. “Where you start to run into some potential challenges is above that, like, 15,000 square foot box.”
Although these obstacles have proven significant, Avery is still hopeful for what’s to come. He attributed it to one factor – the incredible amount of demand in the market, combined with the almost nonexistent new supply. That means any vacancies that do exist may soon be difficult to come by. He went on to predict that in two years, it’ll be a whole lot harder to find space. Today, they have a much easier time getting around it. From this perspective, there is room for optimism since the future of demand for retail space is still being shaped.
The Cataraqui Centre and the other returned properties stand for a big investment opportunity for Primaris. The firm has shouldered a steep financial cost in doing so for redevelopment. Most importantly, it is committed to changing its portfolio to reflect today’s market needs. The estimated cost for repurposing these five sites is between $50 million and $60 million. This underscores just how deep of a fiscal hole we’re in going forward.
