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Canadian Shoppers Grab Rare Chance To Descend on US Border Towns

US Businesses Near Canada Gain When Pandemic Restrictions Are Lifted
The U.S. reopened its land border for fully vaccinated visitors from Canada on Nov. 8 and then dropped the requirement on Nov. 30 that Canadians needed to show a negative COVID-19 test. That requirement has been reinstated. (Getty Images)
The U.S. reopened its land border for fully vaccinated visitors from Canada on Nov. 8 and then dropped the requirement on Nov. 30 that Canadians needed to show a negative COVID-19 test. That requirement has been reinstated. (Getty Images)
CoStar News
December 23, 2021 | 4:57 P.M.

Here's one sign of how border closings in the pandemic are disrupting Canadian shoppers: A private post office box in Niagara Falls, New York, is overflowing with packages, filling the customer waiting area with excess boxes that need to be stored anywhere they can fit.

It's been almost two years since the pandemic started, and the sting of the economic slowdown has been harsh in border regions like metropolitan Buffalo-Niagara. The area has been separated from one of its most loyal consumers: Canadians who shop in the United States to get access to retailers and products not available up north that can also be cheaper in America.

"We had to have somewhere to store the packages. We couldn't even take any more," said Annette Rodriguez, whose husband, Dave, started Consolidated Business International USA in 1987. The company holds packages for customers, and some clients happen to be Canadians who have purchases shipped directly to an American location to gain access to those U.S. retailers that don't ship to Canada.

Packages have spilled into the customer waiting area at a P.O. box in Niagara Falls, New York, after almost two years of Canadians being unable to cross the border for nonessential travel. (Garry Marr/CoStar News)

Whether these shoppers declare all that they buy is another matter, and it's an open secret that many don't. Canadians can face tax bills of at least 13% on U.S. purchases they make on a day trip to America once they reenter Canada. In pre-pandemic times, in the parking lot outside the building at 1342 Military Road in Niagara Falls, some Canadians could be seen ripping open their packages. Throwing empty boxes in the trash could help avoid detection by customs officials on the way back into the country.

"I've seen people changing their tires in the parking lot," putting on newly bought tires that were shipped to her location, Rodriguez said. They're taking a risk: Canadian day-trippers to the United States can have hidden and undeclared purchases — and even the cars they transport them in — seized by customs officials at the border and get hit with a fine.

The United States reopened its land border for fully vaccinated visitors from Canada on Nov. 8 and then dropped the requirement on Nov. 30 that Canadians needed to show a negative COVID-19 test, which can easily cost 150 U.S. dollars, to reenter their country. That resumption of normal commerce between the countries led to a brief surge in cross-border purchasing — until the negative test requirement was reinstated on Tuesday following an increase in coronavirus cases with the emergence of the quick-spreading omicron variant.

Now, with the rule reinstated, U.S. retailers are concerned that some Canadians won't look to shop south of the border because any savings they get by shopping in the United States isn't enough to offset the cost of a COVID test.

"It is, in effect, a border closure ... for retail," the Buffalo Niagara Partnership, a business development group, said on Twitter about the required tests.

Short Reprieve for Retailers

But many U.S. retailers in border towns benefited from the three-week window when the test wasn't required. They relied on that reprieve to help make up for the pandemic's economic destruction in 2020, when U.S. spending by Canadians dropped by US$14 billion, according to American Congressman Brian Higgins. His district includes portions of New York's Erie and Niagara counties.

With about 85% of Canadians living within a 90-minute drive of the United States, the issue of border closings isn't just specific to Toronto and Buffalo. The impact can be felt in states including Vermont, Washington, Maine and Michigan.

"We have noticed the difference" when the negative COVID test was not required in Canada, said Josh Baijot, a real estate broker in Bellingham, Washington, which is less than an hour's drive from Vancouver. "The parking lots are full, and shelves are already emptying. We are already low in stock because of shipping issues, and Canadians have been shopping for more. It's been two years."

Before the pandemic, Canadians would drive to the United States because of lower prices as well as the variety of retailers, said John Crombie, executive managing director of retail services in Canada for Cushman & Wakefield.

"I also think part of it was you made an event out of it, and hopefully, when you come back across the border, you convinced the border people you only spent $50," said Crombie.

Canadians also would drive across the border to take cheaper flights that originate out of U.S. airports. During normal times, Canadians represent 20% of the 5 million annual passengers at the Buffalo Niagara International Airport and the Niagara Falls International Airport, said Pascal Cohen, senior manager of marketing and air service development for the airports. But over the past 18 months, that figure has dropped to about 4%.

Meanwhile, vaccinated Americans visiting Canada must provide a negative PCR COVID-19 test to enter Canada, which Cohen said is "hurting the Canadian economy" and hindering visits.

"I can tell you I won't get a PCR test to go to Ikea," said Cohen, referring to a retailer that doesn't exist in Western New York. "I used to pop into Canada all the time."

Paul Kasti, a Toronto tennis school operator, said he has been waiting almost two years to pick up equipment he ordered in the U.S. because it costs a fraction of what he would pay in Canada. Kasti said he's been paying storage charges waiting for the border to reopen. (Garry Marr/CoStar News)

Canadians, especially snowbirds who winter in U.S. hot spots, did get creative during the pandemic before the land border reopened to them.

"They would put their car on a flatbed truck somewhere near Hamilton [about an hour's drive from Buffalo], then take a helicopter to get them to Buffalo. The truck was allowed because it was commercial traffic. Then they would pick up their car here," said Cohen. "To me, it illustrates rules just don't work."

Travel Industry Disrupted

The Christmas season is probably lost for travel in 2021, he said.

"I'm just hoping by spring break everything will be open because that is a big wave of Canadians. Our peak months are July and August," said Cohen.

Statistics from STR, a global hospitality data and analytics company owned by CoStar Group, show a slight uptick in hotel occupancy in U.S. cities close to the Canadian border like Buffalo and Detroit between Nov. 30, when Canada did not require the test, and when the test was once again mandated on Dec. 21. STR found Buffalo occupancy reached 50.1% for the week that ended Dec. 11. A month earlier, it was 48.9%.

Robert Schell, president of Buffalo-based Pyramid Brokerage, said Canadian shoppers had been a huge part of the local economy that simply dried up.

"You can look at the [car] plates at the outlet mall or the airport, and it's a lot different," said Schell, adding even with some restrictions lifted to enter the U.S. for short-term visits, the traffic hasn't returned. Some observers think things might not normalize until 2024.

"I think it's just slow getting going. I think it will take some time," said Schell.

The broker noted even Buffalo's hockey team, which plays about 10 minutes from the international border, is feeling the pinch, now dead last in the NHL in average attendance with fewer than 8,500 spectators per game. "There would usually be a few thousand Canadians at those games," he said.

"There is nothing better than when a Canadian team is playing in Buffalo," said Sue Sunizzi, who works in guest services for the Buffalo Sabres, with a stadium that seats just more than 19,000 at capacity. "The whole place feels different."

Western New York retailer Laux Sporting Goods noticed an uptick in customers after Canadian border restrictions were relaxed on Nov. 30. (Garry Marr/CoStar News)

The city's NFL team has also been a strong draw for people from Ontario. Nick Kolbe, a manager of popular local jersey store Laux Sporting Goods in Western New York, said he noticed an uptick in business after Nov. 30.

"Those people couldn't get to a game before," said Kolbe. "Canadians are always in here on a game day."

For Ron Graham and his wife, Linda, a December visit to Buffalo was the first time they had left Canada in a couple of years. The retired Hamilton couple ventured out to Niagara Falls on the Canadian side, but it's just not the same.

"It didn't even feel like we had gone away," he said.

Sitting in their car in Buffalo in front of Target, the retailer that has long since left Canada, she said coming to Buffalo is just a chance to visit to see something different.

"It still feels very different being in a foreign country," she says. "We wanted to go as soon as we could."

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