Research & Forecast Report

REGINARETAIL MARKET Fourth Quarter 2015

2 Research & Forecast Report | Fourth Quarter 2015 | Regina Retail Market | Colliers International

Regina Retail Market

After an increase in vacancy in 2014 to 3.80%, Regina’s vacancy has dropped to 2.87% in 2015. The largest single factor in this decline is the absorption of space primarily in enclosed malls, as two of the largest spaces have found new tenants. Whereas in 2014 38% of vacant space was in enclosed malls, that number has fallen to 17%. Regina’s North retail zone has the highest vacancy at 4.5%, which is virtually unchanged and North West Regina remains the tightest market at 0.86% vacancy. Over the course of the year Regina added just under 150,000 square feet to the retail inventory.

CentralDespite a significant rise in the office vacancy rate in the central business district, the retail sector has, in contrast, flourished with a number of new restaurants and pubs. In the spring of 2015 Dr. Coffee’s Café opened and in the summer of 2015 The Capitol and Famosa opened and Malt City opened in the fall of 2015 with additional restaurants planned for 2016. At the same time the downtown has also drawn in other retailers and service providers hoping to benefit from the increased commercial activity.

Vacancy Chart

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Central Northwest North East SouthVACANT (SQ. FT.) 116313 12092 52436 82052 38778

TOTAL (SQ. FT.) 3376562.988 1408673.7 1164735 2784113 2109189

Regina’s most active enclosed mall, the Cornwall Centre, continues to be a dominant player in the market. Currently the Cornwall Centre is at nearly full tenancy and continues to add new retailers regularly; in 2015 the mall added Dynamite and Zumiez. Just outside downtown, the second phase of Canterbury Park’s mixed use development, Canterbury Gardens, added nearly 24,000 square feet of new space which has been largely leased to a variety of tenants.

One of the largest developments in downtown Regina is the new Shoppes on Hamilton in the recently completed Agriculture Place. This high quality, street-level retail development will provide additional inventory to the reinvigorated Hamilton St. Though tenants have yet to be announced, this space will likely appeal to national retailers who prefer to operate in urban cores with high quality street presence.

South ReginaRegina’s south-end continues to be a strong component of Regina’s retail market. Though the south end of Albert St has lost some of the prominence it had long-held, vacancy continues to be a very low and turnover is limited. An example of the continuing popularity of South Albert is the purchase of Petro-Canada’s land at $1,465,000 or $50 per square foot. Additionally, Sherwood Co-op had demonstrated its preference by paying above market prices for the A&W to the north and Plum Garden to the south of its existing gas bar.

The vacancy rate in the south fell from 4.85% in 2014 to merely 1.84% in 2015. This can be directly attributed to two major developments. Firstly the old Canadian Tire space is re-purposing to fit Regina’s first Save-on-Foods. Secondly, the Golden Mile Shopping Centre is undergoing

Central Northwest North East South

Vacant SF 116,313 12,092 52,436 82,052 38,778

Total SF 3,376,563 1,408,674 1,164,735 2,784,113 2,109,189

3 Research & Forecast Report | Fourth Quarter 2015 | Regina Retail Market | Colliers International

a significant alteration which will see a 92,000 square foot Superstore added to the centre of the mall. Later phases will see the redevelopment of the existing Extra Foods into multiple retail spaces, bringing the mall’s total size to 255,000 square feet.

West of Albert Street, Grasslands remains the major location of new retail development in Regina. This site by Harvard Developments continues to expand, albeit with smaller units than seen in the previous year. In 2015 space was added for Lammle’s Western Wear, Canadian Brewhouse, CIBC, McDonald’s and others. In total, Grasslands added approximately 35,000 square feet of new retail space. Work is underway on Regina’s first DSW and a new location for Brown’s Social House. The other significant development is a mixed-use complex under construction in the Urban Village, which will include street-level retail and three floors of residential above.

East ReginaOver the past decade or so, East Regina has become the central focus for retailers in Regina. The largest amount of retail development has occurred here and retailers continue to focus on the area. The current big box development at Grasslands in South Regina is primarily a function of the limited amount of land available in East Regina. Land is priced at a premium and commands up to $2 million dollars an acre or $45 per square foot.

Vacancy in the east has fallen from 5.29% 12 months ago to 2.95% in Q4 2015. The single greatest factor is the significant amount of space absorbed by the Victoria Square Shopping Centre. In 2014 the mall had over 70,000 square feet available and as of Q4 2015 it has approximately 7,000 square feet. Over the past year Goodlife Fitness and Premium Label Outlet entered the Regina market and occupied 33,439 SF and 9,850 SF respectively. Additionally, JYSK and Mark’s relocated and absorbed a substantial portion of the mall’s vacant space. The majority of the available space in the east can be found at these vacated spaces and other speculative space which suffer from less visibility and poor access.

One of the final areas of prime development land began construction in 2015. Choice REIT’s property along the edges of Superstore on Price of Wales is well underway with a projected completion date of Q2 2015. The full

development includes 55,000 SF of new retail space and is currently under construction. The new development will include a number of national restaurant and retail players.

Further development in East Regina has been hampered by a lack of developable land. Sherwood Co-Op expanded its carwash facility by 11,000 SF, and also along Victoria Ave, the Kouros family developed Saskatchewan’s first Carl’s Jr restaurant on an old Esso site. Another notable change was the closure of Regina’s only Future Shop and its redevelopment into the YMCA’s third facility in the City. Major expansion of the East retail will occur as the planned developments further east along Victoria Ave come to the market. Tower Crossing, scheduled for 2017, and Aurora are two of the major power centers planned. The new neighbourhood of The Towns will include a retail component and Revera plans to include 25,000 square feet of retail along Arcola Ave.

North West ReginaThe North West sector maintains its status as the tightest retail sector in the city. Though the vacancy rate is up slightly to 0.86% from 0.59%, there is very little space available as only just over 12,000 SF is vacant. Though there is plenty of land in the Rochdale/Pasqua corridor, it has largely been left undeveloped. The major expansion in North West Regina was Choice REIT’s Superstore property which recently completed construction of Rochdale Crossing, a 46,000 SF complex. This site includes a number of national tenants including Shopper’s Drug Mart, Scotiabank, Montana’s and others.

Vacancy Graph

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4 Research & Forecast Report | Fourth Quarter 2015 | Regina Retail Market | Colliers International

As of Q4 2015 the project is 94% leased. Elsewhere in the sector there are a number of proposed developments awaiting construction. Directly north of the recently completed Comfort Suites on Diefenbaker Dr. is Armour Crossing which proposes up to 130,000 square feet of space. Another significant development is Capital Crossing and a 75 acre mixed use Development surrounding Capital Ford and Capital GMC. On Dewdney Ave to the East, plans for Westerra which include just under 500,000 square feet of retail at Horizons continue to move forward.

Forecast2016 should see Regina’s retail market continue to perform strongly. While other markets are seeing vacancy rise and rental rates fall, retail continues to perform solidly. Colliers predicts that retail rates and vacancy rates will remain relatively steady with moderate absorption as very little speculatively built properties are scheduled for 2016.

In the central core of the city, the Cornwall Centre will remain a core asset and we expect some major retailer announcements along with the expansion into the Havik building and the potential redevelopment of Sears’ space in the coming years. Likewise we expect smaller, local retailers to continue to look at downtown space as part of the overall revitalization that has occurred over the past few years. Overall new retail development is primarily focused on large-scale power centres combined with some local, neighbourhood retail centres. In total, plans call for over 3,000,000 square feet of retail to be developed over the next decade.

Notable Lease

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Notable Lease TransactionsADDRESS - TENANT NAME SIZE (SF)

1. 1420 Albert St - St. John’s Music 5,000

2. 1711 Badham Blvd - Richard’s Beauty College 6,602

3. 1825 Victoria Ave E - YMCA 18,319

4. 312 University Park Dr - Quan’s Hot Yoga 2,272

ADDRESS - TENANT NAME SIZE (SF)

5. 2101 Quance St - Wok Box 1,500

6. 2406 Victoria Ave E - Point Flex Dance Company 4,133

7. 3279 Quance St - Elizabeth’s House of Hosiery 2,400

8. 3735 Quance St - Leopolds Tavern 2,700

Notable Lease Transactions

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