At Yorkdale, a 2 million-square-foot mall in northwest Toronto that is one of North America's premier retail properties, managers noticed that business in the luxury market segment stayed strong even during the worst of the COVID-19 pandemic.
So owner Oxford Properties Group decided to create more space for high-end retailers.
Built in 1964 and now home to 270 stores, the mall was already heavily focused on luxury brands. When Oxford started to look into sales at the mall at the height of the health crisis, it saw that its strategy of focusing on higher-end retailers was working.
"During Covid, we had some interesting learnings," said Caroline Mahoney, senior director of retail leasing for Oxford, during a panel discussion on the luxury market at this month's ICSC Canada conference in Toronto. "When everyone else was struggling, we noticed the luxury market was actually thriving, and with that came an increase in demand for space at Yorkdale."
As part of its ongoing emphasis on luxury, Yorkdale has added 65,000 square feet of new retail space that houses 13 new tenants, the latest being Loro Piana, a luxury Italian clothing brand owned by LVMH Moët Hennessy Louis Vuitton, known as LVMH. Other high-end brands including Versace are set to open a store by year end.
Yorkdale recorded $2.1 billion in sales in 2023, up 8% from a year earlier, according to a Retail Insider report. Moreover, Yorkdale is the only shopping centre in Canada with annual sales topping $2 billion, according to the report.
There's no guarantee these investments will withstand any potential future economic downturns, some retailers are willing to take the risk in a bet that upscale demand will continue.
Luxury across region
On the other end of the continent in Vancouver, QuadReal Property Group has its own luxury-focused project set to open next year at Oakridge Park. The real estate arm of the British Columbia Investment Management Corp. said the development will create a new city centre in the Vancouver area.
The mixed-use project will have 850,000 square feet of retail, including 650,000 of enclosed mall space and 200,000 square feet of what QuadReal calls a high street. Oakridge Park also will contain 3,000 resident units.
"Oakridge was an existing shopping centre prior to redevelopment," said Tara Brockelmann Rissanen, senior vice president of retail leasing with QuadReal. "It was home to a select group of luxury retailers."
As QuadReal discussed keeping those retailers at the new project, they wanted more than just a shopping experience, Brockelman Rissanen said. Men's retailer "Harry Rosen wanted to return but in an even larger format."
She said Vancouver has an established luxury node on Alberni Street.
"We were competing more in our market for luxury in our market," Brockelmann Rissanen. She also said retailers had to be convinced there was a market for their high-end goods on Vancouver's Westside.
Michael Stroll, senior vice president of leasing at Montreal-based Carbonleo, said the first phase of its Royalmount super regional mall opened this summer and has created a luxury retail hub that didn't truly exist before in the market.
"We have created a platform for that," said Stroll. "We had big challenges at the time because we were a small developer telling the luxury world that we were going to build global luxury in an industrial park in a market where no luxury existed."
Stroll said retailers were aware that there were plenty of luxury shoppers in Montreal, but their sales were being fulfilled online.
"We discovered a ton of fulfillment," he said, pointing out that those Montreal customers often were going to other global cities to shop.