Vancouver’s Empty Storefronts

Interior design Store on Granville Vancouver
Villa Beau Interiors Vancouver

Housing prices have dominated conversations in our city – and rightly so. We have some of the most overpriced real estate in the world, which has caused many people to be pushed out of Vancouver. But it’s not just residents who are struggling with affordability issues: retail owners are too. Stroll around streets like Robson, South Granville and West Fourth and you’ll no doubt see numerous “For lease” signs.

A wave of closures

Over the last few years, a slew of retail shops around the city have found themselves in troubled waters.

Take Main Street, for example. The Foundation, one of the most popular vegetarian restaurants in the city, recently closed after 15 years in business. Why would such a successful eatery go out of business? Skyrocketing rent. When the restaurant opened in 2002 (there were just a handful of other restaurants on the street at the time), rent was $1,500 a month. The Mount Pleasant neighbourhood has dramatically changed since then – and so too have prices. It’s believed the rate for a new lease would have been around $8,000 a month. A nearby boutique, Twigg & Hottie, recently closed after 13 years – which the owner described as a result of homeowners and renters no longer having the disposable incomes they used to.

The Foundation- Vancouver’s Best Vegetarian Restaurant Closed Down It’s doors Permanently in 2017

Main Street isn’t alone. On Commercial Drive, the housewares store Wonderbucks closed its doors because its rent was going to double to around $25,000. The owner had been at that location for more than 18 years and had become a staple in the neighbourhood. And over at Cambie Village, the successful Pronto Restaurant announced it was closing because of a “renoviction.”

In the West End, Chocolate Mousse, a kitchenware store that’s been in business for over 30 years, announced it’s closing in 2019 because their tax bill nearly doubled to $130,000, which exceeds their rent. That increase is based on the value of the property, which has grown exponentially to $52 million in 2017, from $16 million in 2016. The Cardero Grocery corner store closed a few months ago after more than 75 years as a fixture of the community because a new landlord declined to renew the store’s lease. It is one of two detached homes on a lot that was recently listed for sale for $3.8 million.

Cardero Grocery Store on Commercial Drive Vancouver

Robson Street, what was once one of the most sought-after locations for retail, has seen many big-name retailers move out – including Chapters, French Connection, Mexx, Starbucks and the Canucks store. Italian Kitchen on Alberni Street had to move locations because its monthly rent of $35,000 was increased to nearly $100,000 (the restaurant was also paying an estimated $150,000 per year in taxes). On nearby Denman Street, numerous retail spaces sit empty – which has led to a 10% vacancy rate on the street, which is substantial when compared to a healthy rate of about 3 to 4%. One of its victims is Dover Arms Pub, which closed down last year after 40 years in business because of spiraling rents.

The stories go on.

Street level commercial vacancies in downtown Vancouver as of first week of January 2018 (source: Downtown Vancouver BIA)

High values fuel gas station closures

A number of gas stations have also been shutting down. But for them, it’s to capitalize on the red-hot real estate market.

Last year, the Esso at the corner of Burrard and Davie was put up for sale. That might not sound like a big deal – except for the fact that it was the last remaining gas station in the downtown core, which makes Vancouver the first big city in Canada to lack gas stations downtown.

Last Remained ESSO In Vancouver Downtown
Esso on Burrard and Davie Street – Downtown Vancouver

No asking price was listed, but it’ll most likely get tens of millions of dollars – like Chevron did with the sale of its West Georgia station for a staggering $72 million. A spokesperson for Chevron said the gas station was one of the highest performing in the whole province of British Columbia – but Vancouver’s sky-high real estate prices enticed them to sell.

What’s causing the trend?

There are a host of factors. When it comes to the high rate of store vacancies, the two biggest culprits are soaring rents and extraordinarily high taxes.

Many independent businesses in Vancouver are on triple-net leases – in which the tenant is responsible not only for paying the landlord the rent, but also maintenance fees and property taxes. And it’s that last one that’s been taking a huge toll on businesses. That’s because BC Assessment assesses property value based on “a property’s highest and best use.” In many cases, that can mean increased residential-use on the same property.

With these extreme costs, independent shop owners often can’t afford to properly run their business, like hiring the staff they need or marketing it. And many get to a point where the prices are too high to even think about passing the extra costs on to customers. Often, the only option is to shut down and move on.

Other factors that are impacting retail zones are:

  • Changing consumer trends

More and more people are turning to online shopping, which has undermined the economic viability of brick-and-mortar shops.

  • Pressure to redevelop land to prioritize residential units.

Often, we’re seeing property owners refusing to renew leases because they want to demo instead.

  • Empty homes

When so many houses sit empty, there are less customers which means less business for mom-and-pop shops that often count on having a customer base in the immediate area.

  • Affordability

High housing prices and living in an expensive city often result in less spending among consumers.

  • Shifting demographics

As more people are priced out of neighbourhoods, that changes the retail landscape. A study for the Globe and Mail by BTAworks found that the number of west-side businesses is dropping. In Dunbar, businesses fell by 8% between 2011 and 2016. And retail businesses on West Broadway between Alma and MacDonald Street dropped by 10%. However, when you look east, businesses were increasing by 11% in the heart of Cambie Street and 13% on East Hastings Street.

What does it all mean?

Vacant storefronts don’t add any value to neighbourhoods. When cherished independent shops close – only to sit empty for months or be replaced by big-name retailers we ultimately lose the character of a neighbourhood. In other words, we lose the vibrancy that often made it so appealing in the first place. And over time, we’ll begin to lose choice and the ability to shop where we live.

Lifelines for retail stores

What, then, is there to do about the retail problem in Vancouver? We’ve noticed a few things happening.

Some innovative retailers have instead turned to temporary spaces – opening pop-up shops, where they take empty storefronts and transform it into retail stores for anywhere from a few days to several months.

Many people have been calling on the government to fix the problem, arguing that businesses need protection to get rents and taxes to more realistic levels. Some options include “split assessments,” which allows unbuilt airspace on top of a retail unit to be assessed at the lower residential tax rate instead of the higher commercial rate, and “three or five-year averaging” that allows tax to be calculated based on the value of the property over a three or five-year period.

And others have called for a tax on empty commercial spaces, like the Empty Homes Tax. The tax could be applied for empty storefronts to encourage landlords to lease out their unused space to create more retail supply and reactivate street-level activity.

What do you think about today’s retail landscape?