January 4, 2011
Strip malls look to be going the way of the dodo – extinct, that is.
As the Globe and Mail reported a couple of weeks ago, developers are turning their sights from parking lots to strip malls in their hunt for land on which to develop in-demand residential projects.
As major Canadian cities have grown up (rather than out) in the last bunch of years, parking lots have been the easiest pieces of urban property to snatch up and redevelop. But, as they become harder to find, particularly in Toronto and Vancouver, strip malls are looking more and more ripe for the picking.
Brad Lamb, president and CEO of Lamb Development Corporation, explains that strip malls, which usually have sizable parking lots themselves, generally cover less than 50 percent of their lot, meaning that a condominium or mixed-used development could increase coverage by, say, 10 times. This in turn means a much higher capitalization rate: Catnip for developers and potential investors.
For its part, the sad, downtrodden strip mall is being left behind by a changing society. The Globe quotes Chris Sherriff-Scott, senior vp at Minto Developments who explains that:
“The nature of retail construction has changed. . . There’s been an emergence in the last 10 to 20 years of a different type of retail complex.”
Plus, historic strip-mall anchors like video and convenience stores are disappearing.
So, good thing or bad thing? The article points out that in some cases communities have a special bond with particular strip malls and are understandably reluctant to see them mowed. But ultimately, for those without any special attachment to their local run-down, half-vacant strip mall, a comparatively more vibrant residential or mixed residential-commercial development seems likely to be the preferable option.
In any event, it’ll be a trend to watch in 2011. . .