Investors spending hundreds of thousands of dollars to buy retail shop space in a new Asian-style mall just north of Calgary say they aren’t worried about Alberta’s struggling economy and low oil prices.
Investors and dignitaries gathered Thursday in a field near the main highway between Calgary and Edmonton to officially break ground for the $200-million New Horizon Mall expected to be completed by late 2017.
The project differs from other Alberta malls in that most of its more than 500 stores are being sold to individual investors who can then lease them to others or take over the space themselves. About 90 per cent of the space available to investors has been sold. Larger stores for anchor tenants–accounting for about 30 per cent of the 320,000 square feet total–are being held by the developer.
Most malls in Canada are owned by property management companies that lease the space to retailers.
Twenty-seven-old hair stylist Eman Kherfan of Calgary says she is using savings and proceeds from a residential property investment to help buy a $370,000 unit near the entrance to the mall.
She says she hasn’t decided whether she’ll bring in a tenant or set up her own hair-styling shop, but she is confident her investment will pay off.
“When it comes to the economy, I feel like it doesn’t affect people that much when it comes to shopping and that kind of stuff. People are still there, people are still spending,” she said.
Calgary businessman Naser Abdo says he’s investing about $1 million to buy two food court locations: a 350-square-foot space suitable for a tenant that needs a kitchen and an 85-square-foot spot for a snack or juice bar.
“The location is great … and I really like the concept, you know, the fact you can own your own,” he said, adding he had a market study done and is confident the mall will prosper thanks to its location on by highway and near the regional CrossIron Mills shopping centre.
New Horizon Mall has also attracted attention from former oil and gas workers.
Monika Swiderski and Amy Boers are both accountants who were laid off from energy company jobs in downtown Calgary in the past year. They have pooled their severance money to buy a 350-square-foot space in a high-ranked area near the escalator and close to a performance stage for about $500,000.
“We just think this is a unique investment opportunity. Where else would you own a piece of a big shopping mall?” said Swiderski, adding she doesn’t know yet who their tenant will be.
She said the budding entrepreneurs have also purchased a gelato franchise to be opened in July at CrossIron Mills.
Eli Swirsky, president of Toronto-based The Torgan Group, says New Horizon Mall is modelled on his company’s Pacific Mall in the Toronto area that opened about 20 years ago. He says the malls are designed to be more like an Asian or European bazaar than a traditional shopping centre.
Retail analyst David Ian Gray of Vancouver-based DIG360 Consulting said he thinks the concept of multiple owners will start out well, but could ultimately lead to a lack of a coherent theme in the mall as the original owners sell their spaces.
Swirsky said that’s not a bad thing.
“This mall, whatever is going to happen Day 1, it’s going to be different a month later, six months later,” he said.
“The difference between this mall and a normal mall or mainstream mall is that the owners of the stores, they determine each day what works for them and what they think is popular.”
He said the mall will likely open with many cellphone stores, electronics shops, jewelry boutiques, and ethnic spices and fashion retailers. But what happens then is largely up to the shop owners.