As Canada's major retail owners continue to adjust their portfolios, Primaris REIT (PMZ-UN-T) has put McAllister Place, a 399,710-square-foot enclosed mall at 519 Westmorland Rd. in Saint John, N.B., on the market.

McAllister Place sits on 79.12 acres, approximately 44 of which are developed. The mall is 98.8 per cent leased to a range of needs-based and service-oriented retailers, with national tenants representing 96.6 per cent of the leased space.

Major tenants include Marshalls, HomeSense, Mark’s, Sport Chek, Lawtons Drugs, Party City, The Brick, Dollarama, GoodLife Fitness, Toys R Us, Foot Locker and RBC. The weighted average lease term for the property, which has approximately 100 stores, is 4.8 years.

It was built in 1978, renovated in 2009 and expanded in 2019.

McAllister Place is well-located

McAllister Place is a 20-minute drive from the fastest growing community in New Brunswick, the Kennebecasis Valley, and is the only full-service regional shopping centre in its trade area. It had a rolling 12-month sales per square foot average of $518 as of April.

The property is in the heart of Saint John’s most dominant retail node in the eastern part of the city, which is also home to East Point Shopping Centre, SmartCentres Saint John and Parkway Mall. Nearby retailers include Costco, Walmart Supercentre, Canadian Tire, The Home Depot, Kent Building Supplies, Sobeys, Best Buy, Leon’s, Value Village and Cineplex.

McAllister Place offers premium frontage and visibility along McAllister Drive and Westmorland Road as well as multiple access points along both thoroughfares. The site has 2,759 parking stalls and is in close proximity to established residential neighbourhoods and commercial activity.

The City of Saint John’s Municipal Plan designates the site as a “Regional Retail Centre” appropriate for higher-density residential and mixed-use development. Primaris has preliminary plans for up to 536 units of high- and medium-density residential development on an 11-acre portion of the site.

Primaris has been active with transactions

JLL’s National Retail Investment Group and TD Cornerstone Commercial Realty Inc. have been retained by Primaris to arrange the sale.

Primaris is Canada’s only enclosed shopping centre-focused real estate investment trust and the country’s largest owner of enclosed malls by property count.

The REIT’s 39-property portfolio totals about 12.5 million square feet and was valued at approximately $3.8 billion (at its share) as of Feb. 14, when it issued its 2023 year-end financial results. 

Primaris purchased McAllister Place and Fredericton’s Regent Mall from Cadillac Fairview for $317.6 million in November 2012.

Primaris has also been responsible for two of Canada’s largest shopping centre acquisitions over the past year, picking up:

• Halifax Shopping Centre and the adjacent Annex office building from the Ontario Pension Board for $370 million in November;
• and Conestoga Mall in Waterloo, Ont., from Ivanhoé Cambridge for $270 million in June 2023. 

Large Quebec City mall also for sale

The retail sector across Canada has been one of the few commercial real estate segments to see a continued series of transactions over the past 12 to 18 months. In a recent interview with RENX, CBRE co-chairman Hillel Abergel said the sector has navigated all the challenges thrown at it, and many of the major institutional owners are rebalancing portfolios.

This means they might be willing to part with some of their premium retail properties based on their new investment thesis, not on asset performance.

“From a grocery-anchored shopping centre perspective, I have not seen a demand-supply imbalance in 20 years like I am seeing right now," Abergel, also a member of CBRE's national investment team, said.

He noted there's “scarcity of supply both on the individual asset level and with portfolios of scale, it is quite unlike anything I’ve ever seen.

“You are not seeing people move off of grocery-anchored shopping centres.”

To that end, McAllister Place isn't the only major Canadian mall up for sale. Reports indicate Oxford Properties’ 1.3-million-square-foot Galeries de la Capitale in Quebec City is on the market at a price in the $300-million range.

The Galeries de la Capitale offers more than 225 stores and services, including the Mega Parc indoor amusement park and an IMAX 3D theatre.

Galeries also includes parking for 5,800 vehicles, which leaves significant room for potential intensification.

A number of smaller retail properties are also being offered for sale, some as investments for stable income, others as potential future development or intensification sites.

In a separate interview with RENX, Colliers' Canada head of research Adam Jacobs agreed with Abergel that the sector is expected to remain active. However, the large institutional owners, which used to be the main buyers of these assets, are now often on the other side of the equation.

"The usual suspects used to be the main buyers, and the usual suspects are now the main sellers,” he said.

- With files from Don Wilcox