Retail Market Demand
Study: 855 Carling Ave.
Ottawa, Ont.
Prepared for:
City of Ottawa
Prepared by:
Shore-Tanner & Associates
August 2010
TABLE OF CONTENTS
page number
Part One: Review of TER Report 3
Part Two: Retail Market Demand Report
I. Executive Summary 8
II. Subject Site and Environs 13
III. Trade Area Population and Employment 17
IV. Existing Retail and Service Businesses 20
V. Demand Analysis 22
Appendices:
A. Inventory of Existing Retail and Service Space: Primary Trade Area
B. More Information Regarding Shore-Tanner & Associates, and the Main
Author of This Report
This study, in two parts, has been undertaken on behalf of the City of Ottawa by the Market Research Division of Shore-Tanner & Associates. Part One presents the results of our review of a report by Tate Economic Research Inc. (TER). Part Two is the report of a study we carried out to determine the extent of market demand and feasibility for the development of retail and service businesses at 855 Carling Ave. in the inner western part of the City of Ottawa.
Part One: Review of TER Report
A. Background
Tate Economic Research Inc. (TER) has prepared a report on behalf of Campbell Steel and Iron Works Limited entitled, “855 Carling Avenue, City of Ottawa, Retail Market Demand Overview”, dated July 2010 (hereinafter referred to as the Subject Report). After having completed our own retail market demand study (i.e., Part Two), we were asked to review the Subject Report prepared by TER. The results of this review are as follows:
B. General Comments and Conclusion
1. Unlike other standard retail studies, including a few by TER which we have reviewed in the past, the Subject Report is too general, has little retail market analysis, and is dominated by opinions which are not supported by facts, analyses, or the study’s own research; and
2. There are inconsistencies in the Subject Report’s research, some basic research tasks are non-existent, minimal or incomplete, and a number of the references made are selective, biased, or out of context.
In conclusion, as a basis of determining whether, what type, and how much ground floor retail development would be warranted at 855 Carling Avenue, the Subject Report is not a valid or reliable document, in our opinion.
C. Specific Comments
In the following, we have first made reference to the topic and page number in the Subject Report, then provided our comments:
1. “2.2 Surrounding Land Uses”, pages 4 and 5 of the Subject Report
Firstly, Dirienzo’s is only about 1,300 sq. ft. in size, has very little exposure as it is in a low-density residential area, is old and dark inside, has low ceilings, and is cluttered. It definitely is not a major grocery store as implied on page 4 and elsewhere in the Subject Report.
Secondly, many of the developments identified are quite large, have hundreds of residents, employees, or customers all of whom are potential shoppers at any retail business on or near 855 Carling Ave. There is no indication of the sizes of these major developments on page 4. There are also omissions of other large developments, such as a massive office tower on the south side of Carling Ave., almost across from the subject site in the Central Experimental Farm.
Thirdly, the retail developments to the west of the subject site consist of only about 10 small and mostly run-down stores. The Plaza on Sherwood Dr. has six of these 10 stores, has been there for more than 30 years, and its access is from Sherwood Dr. It is therefore not correct that “all of the retail stores to the west of the site (outlined above) have direct access to Carling Avenue”, as stated on page 5 of the Subject Report. In particular, there is no direct access to these businesses from the east-bound traffic on Carling Ave.
Lastly on this point, the majority of the businesses on Preston St. are specialty and unique establishments. They attract, in fact rely on, customers from across the National Capital Region and beyond. The Subject Report has provided no evidence to demonstrate that the shopping needs of the residents and employees near (and later at) the subject site are being fulfilled by the Preston St. businesses.
2. “2.3 Accessibility” on page 5 of the Subject Report
The Subject Report has correctly indicated that the lighted intersection at Carling Ave. and Champagne Ave. would facilitate access to the subject site from east and west. It has also stated that Carling Ave. is a busy multi-lane roadway. Nevertheless, due to lack of direct access from Carling Ave. the Subject Report has concluded that 855 Carling Ave. is not suitable for retail development.
Based on field research, we believe that access to 855 Carling Ave. would be more convenient, comfortable and safer for shoppers than from Carling Ave. There are many examples of successful retail plazas where access to them is not from the busier roadway on which they front. In any case, the vast majority of the residents and employees who would most likely shop at businesses on the subject site live or work on the north side of Carling Ave., and most of them within a few blocks of the subject site.
In summary, the Subject Report’s conclusions regarding the surrounding area of 855 Carling Ave. and access to it are invalid as they are based on incomplete, missing, partially wrong as well as ignored crucial information.
3. “3.1 Pedestrian Counts”, page 6 of the Subject Report
While the Subject Report has correctly stated that the existing pedestrian count of 327 at Carling Ave. & Champagne Ave is low, it has ignored three other very important factors:
a. Retail development at grade level itself creates significant pedestrian traffic;
b. The proposed development at 855 Carling Ave., the numerous under-construction, planned and proposed high-rise residential and office towers within two blocks of it will significantly increase pedestrian traffic in this area; and
c. Pedestrian traffic would not be the only source of market demand for businesses on the subject site. Vehicular traffic from Carling Ave., Champagne Ave., and elsewhere north of the site would also be major sources of demand.
4. “3.2 Vehicle Counts”, page 7 of the Subject Report
The vehicular traffic count of 10,641 at Carling Ave.-Champagne Ave. is closer to the upper range of 3,069 to 13,668 identified on page 7 of the Subject Report. Despite this relatively high number, which will certainly increase in the coming years, as well as the existence of the lighted intersection, the Subject Report has concluded that 855 Carling Ave. is not suitable for retail development since it would not have direct access from Carling Ave.
In summary, we find the Subject Report’s conclusions regarding the site’s pedestrian, vehicular counts and access to be inconsistent, incomplete and thus not valid.
5. “Residential Demand For Retail Space”, page 8 of the Subject Report
The Subject Report’s coverage of demand for retail space is, in our view, a critical flaw, for the following reasons:
- One of the most basic steps in a retail market study is the delineation of a capture, market or trade area. Other reports by TER of which we are aware have always taken this standard step. The Subject Report, however, has not identified a geographic trade area for retail development on the subject site;
- Only the residents or office workers in the proposed development at 855 Carling Ave. have been considered to be the sources of support for any businesses on this site. However, the employees at the adjacent Dow Honda to the east of 855 Carling Ave., employees in the two new office towers on Champagne Ave. opposite this site, their customers, other employees and especially other residents within three blocks of the subject site would also be major sources of support for businesses at 855 Carling Ave; and
- There is a major calculation error in “4.3 Residential Demand Analysis” on page 8 of the Subject Report. An average per capita space of 15 sq. ft. would result in demand for 12,000 sq. ft. of retail floor space for the 800 residents on the subject site, and not 1,200 sq. ft, which the Subject Report has calculated.
The Subject Report’s conclusion indicating that there is virtually no residential demand for retail development at 855 Carling Ave. is thus invalid.
6. “5 Office Workers Retail Demand” on page 10 of the Subject Report
Once again, the Subject Report has addressed the retail demand of the office workers only from the subject site. However, there are two new office towers across from the subject site on Champagne Ave., (with 187,000 sq. ft. of space and over 700 employees), other offices and employees within a few blocks of the subject site. These employees, who work within walking distance of the subject site, would also be strong and large bases of market support for businesses at 855 Carling Ave. Therefore, the Subject Report’s conclusion regarding office workers’ demand for retail development is also incomplete, misleading and thus invalid.
- “6 Retail Competition” on page 12 of the Subject Report
The Subject Report has provided a summary of the existing retail and floor space on Preston St. in its Table 3, totaling 218,100 sq. ft. It has then concluded that the existing businesses would serve the shopping needs of potential residents and employees on the subject site, and thus no retail development would be necessary on it.
In our view, this argument is also flawed for the following reasons:
- The trade area for Preston St. and thus its population, employment, tourism and pass-by traffic have not been identified. It is, therefore, not known whether and to what extent the existing 218,100 sq. ft. of space satisfy the shopping needs of Preston Street’s trade area. Without this knowledge, there is no basis to claim that the shopping needs of the residents or employees on the subject site can also be met by the existing 218,100 sq. ft. of space;
- The majority of the stores on Preston St. are specialty and unique businesses which serve the needs of the residents and employees of the entire National Capital Region and beyond, including tourists. The Subject Report has not established any of the basic relationships between the existing supply of retail businesses and the shopping needs of the nearby residents and employees, such as capture rates and market shares;
- As noted in the Subject Report’s Table 3, there are no pharmacies, supermarkets, or general merchandise stores on Preston St. The supply of food stores, hardware, small furnishings, fashion stores and some services is very low. On the other hand, some 90,500 or 41% of the total of the existing 218,100 sq. ft. on Preston St. is eating-drinking establishments, and its vacancy rate is a mere 2.5%.
The existing 218,100 sq, ft, if space is thus skewed in favour of restaurants and bars, does not provide some of the basic store types at all for the daily and weekly shopping needs of the nearby residents and employees, has an insufficient number and variety of other businesses, and its vacancy rate is very low. These are all factors which strongly reflect the market demand and capacity for more retail and service developments.
8. “7 Ground Floor Retailing Success Factors” on page 14 of the Subject Report
The Subject Report has made references to visibility, exposure, ingress and egress, parking and a number of design factors. It has then concluded that the subject site either does not possess these factors or is weak in these respects.
In our view, any of the above valid criticisms of the subject site would have design solutions, and not a single one of them would disqualify it for retail development. In fact, in view of the existing strong and growing demand for more retail development, we do not consider any of the criticisms on pages 14 and 15 of the Subject Report regarding 855 Carling Ave. to be important, serious, or without design solutions.
Part Two: Retail Market Demand Study
I. Executive Summary
The main findings of Part Two of this study are presented below, followed by more detailed substantiation in its main body of the report and appendices.
A. Subject Site and Proposed Developments
The Subject Site is municipally known as 855 Carling Ave., is 2.2 acres (0.9 hectares) in size, located at the northeastern intersection of Carling Ave. and Champagne Ave. which has a traffic light, and has frontage on both of these roadways. The applicant for this site has proposed to develop it with either high-rise office or high-rise residential, with approximately 400,000 sq. ft. of space, or 400 units respectively.
The City of Ottawa supports a mixed-use development concept on the Subject Site, including retail and service businesses at the grade level with either the proposed office or residential development.
B. Environs, Access, and Pedestrian Traffic
1. Within a few blocks of the Subject Site, there are high-rise office and residential towers, including recently completed ones, and another which is under construction at the present time. Adjacent to the Subject Site to the east is Dow’s Honda Dealership which attracts several thousand clients annually. The nearby Dow’s Lake is the site of several major festivals which attract hundreds of thousands of tourists and locals annually. Two blocks to the east of the Subject Site is Preston St., also known as Little Italy. There are numerous restaurants and two live comedy theatres on this street, and they attract customers from across the National Capital Region and beyond. There is also an existing station for the O-Train, immediately east of the Subject Site, and north of Carling Ave.;
2. In addition to the Subject Site, there are four sites within two blocks of it proposed for residential development with a combined total of 517 units;
3. Access to the Subject Site would be from Champagne Ave. which we consider to be easier, more convenient and safer than from Carling Ave.;
4. With an average daily vehicular traffic volume of 10,641 on Carling Ave. (a 4-6 lane Arterial Mainstreet) and Champagne Ave., the Subject Site is highly visible and well exposed to potential customers. As well, the proposed Light Rail Transit system would make the Subject Site accessible to many thousands more potential shoppers; and
5. Grade-level retail development in high-rise buildings has become popular again. It significantly increases pedestrian traffic volumes, and is a major contributor to the energy, dynamism, appeal, attractiveness, safety and security of the large area in which it is located.
It is therefore, concluded that the Subject Site is excellent for grade-level retail and service business development from the perspective of location, access, size, surrounding land uses, and development trends.
C. Existing Inventory of Floor Space
1. There is a total of 167,400 sq. ft. of floor space within the Subject Site’s Primary Trade Area (PTA) of which only a mere 2.7% is vacant (Appendix A);
2. At least 100,000 sq. ft. or 60% of this space is in specialty restaurants and businesses which serve the entire National Capital Region and beyond, including tourists;
3. The three largest types of the existing businesses are:
- Eating-Drinking and Entertainment 34.0% of the total
- Automotive Businesses 22.2% of the total
- Specialty Businesses 11.2% of the total
4. There are new, modern, attractive, as well as old and run-down stores in the PTA which badly need renovation and modernization; and
5. In addition to department and other large stores, the PTA lacks (sufficient) food stores, pharmacies, hardware, fashion, other convenience and service businesses.
D. Trade Area Population and Employment
1. The Primary Trade Area[1] of the Subject Site has an estimated 4,000 residents (Table 1), and 9,400 employees (Table 6) at the present time (2010);
2. If residential towers were to be developed on the Subject Site, the PTA’s population is estimated to increase by an average of 195 residents annually, to 8,100 by the year 2031 (Table 2). In this case, the PTA’s employment is estimated to increase to 11,500 by 2031 (Table 6), representing an average annual growth of 100 jobs;
3. With office development on the Subject Site, the PTA’s population is estimated to increase by 157 annually to 7,300 by 2031 (Table 1). Its total employment, on the other hand, is estimated to increase to 13,200 by 2031, representing an average growth of 181 jobs per year (Table 6);
4. For the six year period 2010-2016, the PTA’s total population is estimated to increase by 1,333 to 2,000 (Tables 1 and 2), and its total employment by 600 to 2,150 (Table 6); and
5. Population and employment just outside the PTA, number of tourists, pass-by traffic, visitors to the Dow’s Lake area, and other potential clients for businesses on the Subject Site are also expected to increase over the next six years.
The Subject Site has thus been in a growing and prospering area. In addition to its own proposed development which would be quite large, the Subject Site would benefit from the expected robust future growth in the PTA, most of which would be within a couple of blocks of it. There is thus a strong and rapidly growing market base for retail development on the Subject Site.
E. Supportable Space
1. The spending of the residents of the PTA is estimated to be supporting a total of 140,000 sq. ft. of all types of retail and service floor space combined within and outside the PTA in 2010 (Table 4). By the year 2031, this space is estimated to increase to between 255,500 to 283,500 sq. ft. (average annual growth of 5,500 to 6,833 sq. ft.);
2. The spending of the employees in the PTA is estimated to be supporting 44,650 sq. ft. of retail and service space in 2010 (Table 6), and increasing to between 54,625 to 62,700 sq. ft. by 2031 (average annual growth of 475 to 859 sq. ft.);
3. The residents and employees of the PTA are thus estimated to require 133,550 to 153,475 sq. ft. of additional retail and service floor space in the period 2010-2031 (Table 8). For the six year period 2010-2016, these residents and employees require between 56,760 to 72,850 sq. ft. of additional space (Table 8);
It is thus evident that the residents and employees in the PTA have a strong need for additional retail and service businesses at the present time. Furthermore, this need would only increase significantly in the coming years due to the expected growth in the number of residents and employees. In view of these favourable factors, the Subject Site is, in our opinion, in an advantageous and strategic position to be developed with retail and service businesses[2].
F. Demand From Within Five Blocks of the Subject Site
1. The area within five blocks of the Subject Site has an estimated 3,100 residents, and 7,200 employees in 2010 (Table 9);
2. These residents and employees are estimated to be supporting a total of 142,700 sq. ft. (108,500+34,200) of retail and service floor space within and outside the PTA in 2010 (Table 10);
3. In the six year period 2010-2016, these residents and employees are estimated to require an additional 63,950 sq. ft. (63,000+950) of various retail and service floor space combined;
4. For food stores, restaurants, pharmacies, other convenience-type retail and service businesses, the residents and employees in these five blocks need a total of 72,020 sq. ft. (37,820+34,200) of floor space in 2010 (Table 11); and
5. In the next six year period 2010-2016, the requirements of the residents and employees in these five blocks for these types of businesses is estimated to increase by 20,750 to 22,910 sq. ft. (12,200+8,550=20,750 and 21,960+950=22,910)
Up to five blocks is a reasonable walking distance from the Subject Site, and as shown in Tables 10 and 11, there is a strong and growing demand for additional businesses. In view of such strong and favourable conditions, it is concluded that there is ample market demand and support for at least 20,000 sq. ft. of retail and service businesses on the Subject Site (depending on the Site’s development potential, design, and regulatory conditions, which are separate from market demand issues, a different amount of space may ultimately be developed.)
G. Recommended Businesses On the Subject Site
The most marketable businesses on the Subject Site would be those functioning to serve the needs of employees, tourists, visitors, and pass-by traffic (mostly day time), as well as the needs of the nearby residents day and night. These needs would be primarily for daily, weekly, convenience-type and service shopping of these diverse market segments. A combination of the following businesses totaling about 20,000 sq. ft. would serve these purposes well from the market demand point of view, in our opinion:
|
Type
|
Approximate Size (sq. ft.)
|
|
Drug Store
Convenience Store (such as Mac’s, Quickie’s)
Coffee Shop (such as Tim Horton’s, Second Cup)
Sandwich/lunch shop (such as Quizno’s, Subway)
Deli/Cheese/Produce Store (such as Nicastro’s)
Dry Cleaning Depot
Pet Store
Flower Shop
Hardware Store (such as Home Hardware)
Canadian-American Restaurant (such as Perkins, East Side Mario’s, Lorenzo’s)
Bakery
Bank/Financial Institution
Specialty Retail Stores (up to 3: such as fashion, cards, gifts)
Specialty Service Stores (up to 3: such as spa, yoga, Curve’s)
Specialty Wine Shop
|
2,000-5,000
1,500-3,000
1,300-2,000
1,200-1,500
1,500-2,500
200-500
1,000-1,500
800-1,500
3,000-5,000
2,000-4,000
1,500-2,000
1,500-2,500
1,000-1,500 each
1,000-2,000 each
1,000-1,500 |
We are aware that some of the above stores already exist in the PTA. More, and especially higher quality ones would be market viable on the Subject Site, in our opinion. As well, we realize that these businesses would not be established until 2013 or after, when the Subject Site has been developed. They have been recommended partly to fill the existing void, and partly to serve the growing demand for such stores in the coming years.
II. Subject Site and Environs
A. Subject Site
Located at the north-eastern intersection of Carling Ave. and Champagne Ave., the Subject Site is 2.2 acres (0.9 hectares) in size, with frontage on both of these roadways. It is vacant at the present time, and proposed to be developed with two office or residential towers.
B. Adjacent and Nearby Uses
Adjacent to the Subject Site on the east is a large Honda Dealership (Dow’s) with show rooms, parts, and service. To the east of this dealership, at the north-western intersection of Carling Ave. and Preston St. is a CIBC bank. To the north of these two establishments is a parking lot followed by a 7-storey rental apartment building. There is also an existing station for the O-Train, immediately east of the Subject Site, and north of Carling Ave.
Across from the Subject Site on the south side of Carling Ave. is the Central Experimental Farm with a high-rise office tower surrounded by green open space.
On the west side of Champagne Ave. opposite the Subject Site, there are two new office towers, called Dow’s Lake Court, with approximately 187,000 sq. ft. of space. To the west of these towers (330 Loretta), a 9-storey condominium tower (85 units), and 30 townhouse units have been completed in recent years and are now occupied. A couple of blocks to the north of the Subject Site on Champagne Ave. there is a 17-storey rental building called Emerald Towers. Across this tower is The Ottawa Humane Society which is in the process of being sold for redevelopment.
C. Proposed Developments
The area within about 15 minutes driving distance of the Subject Site has been in transition: numerous residential and commercial developments have been attracted there since the early 2000s, and more are proposed. There are still scattered parcels of vacant land available for development. Redevelopment potential in this area, however, is much stronger since there are many old and under-utilized land uses there. At the present time, we are aware of the following:
1. 125 Hickory St.
This site is only one block to the north of the Subject Site, and is proposed to be developed with two high-rise residential towers, offering 307 units, as well as 10,200 sq. ft. of grade-level retail;
2. 100 Champagne Ave.
This site is two blocks north of the Subject Site, and proposed to be developed with 94 condominium and 6 townhouse units.
3. 330 Loretta Ave.
This property is located one small block to the west of the Subject Site. It is proposed and approved to be developed with a high-rise residential tower, having 66 units.
4. 490 Preston St.
Two blocks to the northeast of the Subject Site, this property is proposed and approved to be developed with 44 condominium units.
5. 101 Champagne Ave.
This property is located one block to the north of the Subject Site, and used by The Ottawa Humane Society at the present time. It is in the process of being sold, and most likely redeveloped into high-density residential.
6. Dow Honda Dealership
Located adjacent to the Subject Site on the east, this dealership is rumoured to be proposed for re-development. It has access from both Carling Ave. and Preston St., and is in an excellent location, in our view, for high-density commercial and/or residential development.
Items 1-4 above would add 517 units within three blocks of the subject site.
D. Access
Access to the subject site would be from Champagne Ave. The intersection of Carling Ave. and Champagne Ave. has a traffic light which makes access to Champagne Ave. and thus to the Subject Site convenient. In our view, the Subject Site’s access from Champagne Ave. is more comfortable and safer than from Carling Ave. which is a busy 4-6 lane Arterial Mainstreet roadway[3]. Carling Ave. is a single-sided roadway on the north at the Subject Site. The vast majority of the residents and employees who would potentially shop at the recommended businesses on the Subject Site are also located on the north side of Carling Ave. As well, the lighted intersection of Champagne-Carling provides easy vehicular access to traffic in both directions on Carling Ave. It should also be noted that the City of Ottawa is embarking on the development of a Light Rail Transit system, and it would most likely provide exposure and access to the Subject Site for thousands more potential shoppers.
E. Pedestrian Traffic
At the present time, the volume of pedestrian traffic on Carling Ave. and Champagne Ave. is low. This however, is not due to lack of people, but lack of retail, other facilities and ambiance which are necessary to attract pedestrians. There is ample evidence indicating that retail and service businesses at grade-level attract pedestrians/shoppers, create dynamism, ambiance, attractiveness, as well as increasing the sense of safety and security:
1. In 2001, the average number of pedestrians on Richmond Rd. at Kirkwood Ave. in Westboro was only 56. Once a Loblaws store was opened in 2002/2003 on Richmond Rd. just west of Kirkwood Ave., the pedestrian volume began to increase at this intersection, and it was 369 as of August 2009. At the Loblaws store itself, pedestrian volume on Richmond Rd. had reached 918 in August 2009 whereas it was fewer than 50 in 2000[4]; and
2. Further west on Richmond Rd., there have been more grade-level retail and residential developments in the last 10 years. As a result, the average daily pedestrian traffic volume on Richmond Rd. at Roosevelt Ave. had increased to 2,136 in August 2009, whereas it was only a couple hundred in the early 2000s[5].
Commercial strips with grade-level retail businesses are generally successful as long as there is a good and ample mix of residential and office developments nearby. Elgin St. in Centretown, Bank St. in the Glebe, and the ByWard Market are other examples of vibrant, attractive, dynamic, and busy commercial areas in Ottawa all of which have ample retail and service businesses at grade.
F. Grade-Level Retail and Service Development
Grade-level commercial development with residential, office and/or hotel above is a well-established tradition. The move to suburban areas since the 1950s had weakened this form of development. Due to changing socio-demographic, economic, environmental, and lifestyle trends, however, this type of development has become increasingly more popular in the last 10 years. The City of Ottawa’s Official Plan has also been encouraging intensification which further contributes to the development of mixed-use projects, with grade-level retail where appropriate.
In Westboro, Centretown, Central Area, and ByWard Market, many of the residential and office towers developed in the last 5 years have grade-level retail and service businesses. Within the PTA, the Sakto mixed-use project at 333 Preston St. (near the Queensway) has commercial businesses at grade-level and offices above. It was developed in 2008 and has made this part of Preston St. much more attractive, dynamic, pleasant and economically successful.
There are of course, numerous examples of older residential and office towers with commercial businesses at the grade-level. The high-rise apartment tower with several stores at the grade-level at the south-western intersection of St. Laurent Blvd. and MacArthur Ave. is one example in an inner suburban area.
G. Conclusions
The Subject Site is quite suitable for mixed-use development with retail and service businesses at the grade-level. Its location, access, size, and development trends fully support the concept of grade-level retail with dwelling units and/or offices above.
III. Trade Area Population and Employment
A. Trade Area
Retail and service businesses draw customers from several different sources. Nearby residents, employees, tourists, vehicular and public transit passengers, and others who pass by these businesses, or otherwise know about them, make up these sources. Depending on location, type and other factors, some businesses attract customers from only one of these sources, and others from two or more.
The geographic area from which a business attracts most of its customers/sales is referred to as capture, market or trade area. Primary Trade Area (PTA) is typically the source of at least 50% of a business’s total sales. The rest is attributed to Secondary Trade Area (STA), and in some cases, to Tertiary Trade Area (TTA), and/or to inflow (i.e., sales from all other sources combined).
Based on field research of the Subject Site, walking and driving in its surrounding area, existing commercial facilities, natural and human-made conditions, we have defined the following Trade Area for retail and service businesses on the Subject Site[6]:
1. Primary Trade Area (PTA): The area bound by the Queensway to the north, Bronson Ave. to the east, Carling Ave. to the south, and Bayswater Ave. to the west.
2. Secondary Trade Area (STA): The area bound by Willow St. to the north, Bronson Ave. to the east, Queen Elizabeth Drive to the south, and Bayswater Ave. to the west, less the PTA.
These areas are small and within walking and/or short driving distances from the Subject Site up to a maximum of 10 minutes. The PTA consists of an area which is up to six blocks from Carling Ave. to the Queensway (north-south direction) and up to 11 blocks from Bronson Ave. to Bayswater Ave. (east-west direction). The STA is about one-third the size of the PTA in area.
Trade area delineation is an essential first step in a retail feasibility study. It is also a difficult one since the analyst’s judgement plays a role in it as well. For the Subject Site, a little smaller or larger trade area would also be valid. In view of the size, location, and other characteristics of the Subject Site, however, we are confident that the defined Trade Area is quite reasonable.
B. Trade Area Population
The Trade Area’s residents would be the strongest potential source of business for retail and service businesses on the Subject Site. The total population of the Trade Area at the present time (2010) is estimated to be approximately 7,200 consisting of 4,000 in the PTA and 3,200 in the STA (Table 1).
The Trade Area has been in transition since the early 2000s, and numerous additional residential and commercial developments are under construction, planned or proposed.
The Subject Site is proposed to be developed with either residential or office towers. We have assumed in this study that by the end of 2013, development (residential or commercial) on the Subject Site and nearby would be completed (while actual full development may not occur until 2015 or later, we thought that addressing growth over a 3-year period would be more appropriate for this study).
In Tables 1 and 2, we have provided forecasts of population in the Trade Area to the year 2031 to coincide with the City of Ottawa’s planning horizon. Accordingly:
1. The Trade Area’s total population (Table 2) is estimated to increase to 12,800 by 2031 if the Subject Site were to be developed with residential towers (8,100 in the PTA, and 4,700 in the STA respectively);
2. With office development on the Subject Site (Table 1), the Trade Area population is estimated to grow to 12,000 by 2031 (7,300 in the PTA, and the same 4,700 in the STA).
On an average annual basis over the period 2010-2031, the PTA is thus estimated to grow by 157 to 195 residents.
C. Trade Area Employment
There are numerous private-sector as well as government office towers in the Trade Area. Preston St. has many restaurants and other services which are labour intensive. As a result, employment in the area is quite high:
1. In 2006, there was a total of 9,037 jobs in the PTA (Table 3). Conservatively, this number is estimated to be approximately 9,400 now (Table 6);
2. In the surrounding area of the PTA, the number of jobs was even higher at 11,486 in 2006 and more now (Table 3).
If ultimately office towers are developed on the Subject Site, we estimate the total number of employees in the PTA would increase to 11,200 by 2013, and to 13,200 by 2031. With residential development on the Subject Site, the total number of employees in the PTA is estimated to increase to 9,700 by 2013, and to 11,500 by 2031 (Table 6).
D. Summary of PTA’s Population and Employment
Based on Tables 1, 2, 3, and 6, the PTA’s population and employment for the period 2010-2016 are as follows, depending on whether residential or office towers would be developed on the Subject Site.
|
Year |
Population |
Employment |
|
2010
2013
2016 |
4,000
5,000-5,700
5,330-6,000 |
9,400
9,700-11,200
10,000-11,550 |
It is therefore, concluded that retail and service businesses on the Subject Site would have these large market segments in the PTA from which to capture at least 50% of their total annual sales.
IV. Existing Retail and Service Businesses
A. Total Floor Space
In late August 2010, we carried out field research in the PTA to identify the existing inventory of retail and service businesses. The results are presented in Appendix A which identify the name, type and approximate size of every retail and service business within the PTA. As shown:
1. There is a total of 167,400 sq. ft. of retail and service floor space in 85 businesses within the PTA of which only 4,500 sq. ft. or a mere 2.7 % is vacant;
2. The majority of the floor space is along Preston St., most of which is eating-drinking and entertainment establishments;
3. The largest categories of the existing businesses are:
a. Eating-Drinking and Entertainment 56,900 sq. ft. 34.0% of total
b. Automotive (sales & service) 37,200 sq. ft. 22.2% of total
c. Specialty Businesses 18,800 sq. ft. 11.2% of total
4. The largest business in the PTA is Dow’s Honda at approximately 25, 000 sq.ft. The next
largest is Russell Food Equipment at about 8,000 sq.ft.; and
5. There are two live theatre Comedy Clubs in the PTA called Absolute Comedy and Yuk
Yuk’s, with a combined total space of 5,000 sq.ft.
B. Evaluation of the Existing Businesses
1. The residents and employees in the PTA have needs for a wide range of retail and service stores. On an average basis, each resident can support 35 sq. ft. of various retail and service floor space. With a population of 4,000 (Table 1) in 2010, the PTA residents are supporting an estimated 140,000 sq. ft. of floor space within as well as outside the PTA. The existing 167,400 sq. ft. in the PTA would thus appear at first to be more than the PTA residents’ needs;
2. The vast majority of the existing businesses, however, are specialty and have City-wide markets (e.g., the numerous restaurants, Absolute Comedy Club, and Dow Honda on Preston St.). Attributing an estimated 80% of the floor space of these businesses to customers from outside the PTA would leave approximately 88,000 sq. ft. for the PTA residents. Even if we assume that all of these 88,000 sq. ft. is supported by the PTA residents, there would still be a shortfall of 52,000 sq. ft. for their shopping needs;
3. A number of large stores, such as supermarkets, department and furniture stores do not exist in the PTA which is normal since they require much larger number of residents than the PTA’s 4,000;
4. Many small businesses for the daily, weekly and convenience-type shopping of the residents, however, do not exist at all, or do not exist in sufficient quantity or quality within the PTA. Examples include businesses offering produce, meat, pharmacy products, hardware, dry cleaning, flowers, pet products, general merchandise and some services;
5. Most of the businesses on Preston St. are attractive, popular, and very well established. Close to the Queensway, there are several new retail and service businesses on Preston St. at the grade level of an office development. These businesses depend primarily on the residents, employees, and tourists from across the National Capital Region and beyond;
6. Many of the existing businesses in the PTA outside Preston St. are small, cluttered, old, run-down, and in need of renovations and modernization. They represent an outdated era in retailing;
7. The population of the PTA is expected to grow significantly in the coming years. The recent, planned and proposed residential developments have been targeted at the middle and upper-middle income segments of the market. Their level of affluence and other characteristics point to the demand for more and better local facilities for their daily, weekly, service and convenience-type shopping needs; and
8. The PTA has a large number of employees. The businesses on Preston St. most likely attract many of them for lunch, dinner, and other services. However, many of these employees are far from Preston St., do not necessarily want to or can afford to go frequently to the specialty restaurants on this street, and some have a limited choice of a cafeteria in their buildings (e.g., the two Dow’s Lake Court office towers opposite the Subject Site, with over 700 employees). For these employees, Dow Honda’s employees and customers, other employees within the PTA and outside (e.g., The Ottawa General Hospital), more choice and in different locations than on Preston St. would be well supported, in our expectation.
V. Demand Analysis
A. Sources of Demand
The major sources of demand for retail and service businesses are:
1. Existing Trade Area population and its expected future growth;
2. Existing Trade Area employment and its expected future growth;
3. Residents and employees from outside the Trade Area;
4. Tourists, pass-by traffic, others who do not live or work within the Trade Area, but shop at its stores (e.g., suppliers, customers of nearby businesses).
Businesses in the PTA are believed to serve clients from all four sources above. For example, Dow Honda serves several thousand clients (for service) and potential clients (for sale) annually. Some of them probably shop at the existing businesses in the PTA, and more would likely shop at the recommended businesses on the Subject Site. Another example would be Dow’s Lake. The Tulip, Winterlude and other festivals and activities there attract hundreds of thousands of residents and tourists annually. The Subject Site is close to Dow’s Lake, and the recommended businesses there would be in a strong position to attract some of the visitors and tourists from Dow’s Lake.
B. Basis of Demand Estimation
In previous chapters, we have addressed the growth characteristics of the STA as well as the PTA. Reference to the STA has been strictly for the purpose of providing more information and context for the area surrounding the Subject Site. In this chapter, we have used the number of residents and employees within the PTA only to estimate supportable floor space on the Subject Site. Demand from the residents and employees of the STA, the rest of the National Capital Region, tourists, pass-by traffic, other inflow is NOT included in this study, and would thus be additional.
C. Supportable Per Capita Space
In the retail industry, it is generally agreed that each resident of an area can support an average of 35 sq. ft. of retail and service floor space by their annual spending. Due to population growth, inner and outer suburban areas are often under-stored, and downtowns can be overstored. The defined PTA has been growing rapidly, and significantly more growth is planned or proposed in this area over the coming years. As a result, the PTA has been under-stored for both large businesses (e.g., Canadian Tire), as well as for small and convenience-type retail and service businesses. The overall average supportable per capita space by store type is presented in Table 4 (second column from left).
D. Total Supportable Space By PTA Residents
Based on the population of the PTA and the average per capita space, we have estimated the total amount of supportable retail and service floor space by its residents. As demonstrated in Table 4:
1. The residents of the PTA are estimated to be supporting a total of 140,000 sq. ft. of all types of retail and service floor space combined in 2010 within, but mostly outside the PTA;
2. Assuming that office towers would be developed on the Subject Site, and including the known planned and proposed residential developments, we estimate the PTA residents’ expenditures would support a total of 255,500 sq. ft. of floor space by 2031 (i.e., an increase of 115,500 sq. ft. in 21 years, or an average of 5,500 sq. ft. annually); and
3. If residential towers were to be developed on the Subject Site, the total supportable floor space would increase by 143,500 sq. ft. to 283,500 sq. ft. (Table 4) by 2031 (i.e., 6,833 sq. ft. on an average annual basis).
E. Total Supportable Space By PTA Employees
It is well established that employees patronize eating-drinking establishments, corner stores, other retail (drug stores) and service businesses (beauty salons, dry cleaning) near their work. On a conservative basis, we have provided estimates of some of these expenditures, and calculated the supportable space per employee. As shown in Table 5, we estimate that each employee supports an average of 4.75 sq. ft. of retail and service floor space through his/her annual expenditures near work.
The existing number of employees in the PTA is estimated at 9,400 in 2010. By the year 2031, this number is estimated to increase to 11,500 to 13,200[7] depending on whether office or residential towers would be developed on the Subject Site (Table 6).
Using the average per capita space, and forecasts of employment, we have estimated the total supportable floor space by the PTA’s employees. As demonstrated in Table 6:
1. The employees in the PTA are estimated to be supporting 44,650 sq. ft. of food, service and convenience-type floor space in 2010 within, as well as outside the PTA; and
2. By 2031, the space supported by PTA’s employees is estimated to increase to 54,625 to 62,700 (i.e., an average annual increase of 475 to 860 sq. ft. annually).
F. Summary of Total and Additional Supportable Space: PTA
1. The residents and employees within the PTA support a total of 184,650 sq. ft. of retail and service floor space combined, within as well as outside the PTA (Table 7);
2. By 2031, the total supportable space is estimated to increase to 318,200 to 338,125 sq. ft. (Table 7); and
3. On an average annual basis from 2010 to 2031, the residents and employees of the PTA are thus estimated to need an additional 6,360 to 7,310 sq. ft. of retail and service floor space (Table 8).
There is, therefore, significant demand for additional retail and service development within the PTA at the present time. Furthermore, due to the expected population and employment growth, this demand will only increase in the coming years[8].
G. Demand From Within 5 Blocks of Subject Site
We have obtained the number of residents and employees within five blocks of the Subject Site from the City of Ottawa for 2006. Based on the available information, we have also provided forecasts of the population and employment in these blocks for the period 2010-2016. As demonstrated in Tables 9-11:
1. There are an estimated 3,100 residents, and 7,200 employees within five blocks of the Subject Site at the present time (Table 9);
2. In the next six years, this population is expected to increase to 4,100 to 4,900. Total employment in this period is expected to increase to 7,400 to 9,000 (Table 9);
3. The residents and employees in these blocks are estimated to be supporting a total of 142,700 sq. ft. of various retail and service businesses at the present time (108,500 sq. ft. by residents, and 34,200 sq. ft. by employees, Table 10);
4. By 2016, the total supportable space is estimated to increase to 186,250 to 206,650 sq. ft.; and
5. The growth in demand for additional retail and service development within five blocks of the Subject Site is thus estimated to be 63,950 sq. ft. by the year 2016.
H. Demand For Viable Businesses On the Subject Site
In view of its size, location and other characteristics, we believe that only a selected number of businesses would be viable on the Subject Site. These would be primarily food stores, eating-drinking and service businesses (although a few specialty fashion, gift, and other businesses could also be viable). As well, up to five blocks from the Subject Site would be walkable by most residents and employees within these blocks. Based on these factors, we have estimated the total, as well as the warranted additional floor space supportable by the residents and employees of these five blocks (Table 11);
1. The residents of the area within five blocks of the Subject Site are estimated to be supporting a total of 37,820 sq. ft. of the selected retail and service stores, and its employees are supporting 34,200 sq. ft. in 2010;
2. By 2016, the residents could be supporting 50,020 to 59,780 sq. ft., and the employees, a total of 35,150 to 42,750 sq. ft.; and
3. Between 2010 and 2016, therefore, the residents of the area within five blocks of the Subject Site would need 12,200 to 21,960 sq. ft. of ADDITIONAL selected retail and service floor space (the employees would need 950 to 8,550 sq. ft. of additional space)
The residents and employees of the area within five blocks of the Subject Site are thus estimated to require an additional 20,750 to 22,910 sq. ft. of food stores, eating-drinking, service, and convenience-oriented businesses in the period 2010-2016. This, furthermore, is on top of the shortage of such stores for the existing residents and employees. In view of such a strong and growing demand, therefore, it is concluded that more than 20,000 sq. ft. of retail and service floor space can be well supported on the Subject Site, and more would still be needed after 2016.