The competitive challenges of Ottawa's Rideau BIA

AACI | Vice President, The Regional Group of Companies Inc.
  • Sep. 30, 2015

There was a kerfuffle between the City of Ottawa and one particular group of local businesses recently over a three-year street closure related to light rail transit construction.

John ClarkThe area in question is part of the Downtown Rideau Business Improvement Area, a strip sandwiched between two destinations that get plenty of traffic. The first is Ottawa’s iconic tourist destination, the ByWard Market.

The other is the Rideau Centre. This ever-growing shopping mall (160 stores and counting) is joined at the hip to Ottawa’s stylish new Convention Centre and drawing big fashion names like Nordstrom, Tiffany & Co., Kate Spade and Stuart Weitzman.

Substantial amount of pedestrian traffic

The Rideau Centre already benefits from a substantial amount of pedestrian traffic, as commuters pass through on their way to and from work each morning. (It’s also adjacent to the University of Ottawa campus and nearby student residences.)

That’s only likely to increase in a couple of years, when the shopping mall gets its own direct connection to the Rideau/Williams Street station on the new LRT Confederation Line.

Rideau Street business owners knew part of the street would be closed for LRT construction. But in August, they were informed with short notice of the closure of the three blocks right behind the Rideau Centre, will last for three years.

(For the record, pedestrian traffic will still be given access to most areas, while some transit buses, taxis and delivery vehicles will also be allowed. City staff and the BIA are still working out the details.)

This ruffled a few feathers, to say the least.

Construction woes just scratch the surface

A member of the BIA’s board, who preferred to stay anonymous, said many businesses in the neighbourhood have already suffered declines in revenue over the past year of about 20 per cent, which they attribute to greater competition from big-box retail in the ’burbs.

This person’s expectations are the street’s partial closure will slash business by another 20 per cent. If this proves true, it could be fatal blow for many small businesses.

But I’m of the mind Rideau Street’s been struggling for a while, for reasons that have nothing to do with street construction. In fact, it’s a telling case study of how fragile the economics can be for a retail area that relies on bringing shoppers from other areas of the city.

One of my urban planning colleagues here in the office says that big shopping complex, the Rideau Centre, has completely changed downtown retail in Ottawa. I’m not sure I agree with him, but it does appear much retail trade has gone indoors in recent years.

He points to the example of Kingston, Ont. – a much smaller city with what is proportionately a much larger downtown retail area that’s a popular tourist destination.

The legacy of an urban-planning strategy gone wrong

What I believe sparked Rideau Street’s decline was the infamous bus mall in the late ’80s. Efforts to make the street more pedestrian-friendly with enclosed areas on the street failed miserably. To quote one report from 1989, “The bus shelters smelled, they became homeless shelters and within five years, almost all the shops on that part of the street failed.”

Shoppers with disposable income went elsewhere. After the bus mall was dismantled, the vacuum was filled with businesses that have more niche appeal, like tattoo parlours. A bad element related to the drug trade and other unsavoury pursuits put down roots.

While much effort and progress has been made to deal with these challenges, a large percentage of shoppers with disposable income still have to be convinced Rideau Street is a safe and respectable place to go.

The other challenge Rideau Street faces is heavy truck traffic. The National Capital Region desperately needs another bridge over the Ottawa River between Ontario and Quebec to route truck traffic through a more rural area. That’s a whole separate issue that’s been politically deadlocked for years.

So the status quo persists – big rigs come right through downtown Ottawa, most of them passing on Rideau Street.

The never-ending battle for consumers’ wallets

Most retail areas in Ottawa’s core neighbourhoods, as they do in any city, have the same challenge – area residents alone are not enough to support the density of retail businesses. They are all in competition with each other and the big-box developments in the ‘burbs to draw more people who must drive or bus in from a distance.

The concern for Rideau Street business owners with the construction shutdown is that the key base of shoppers who must drive in won’t bother with the traffic headache – they’ll just go somewhere else.

This remains to be proven, but if you take Sparks Street further to the west, which has been a pedestrian-only mall for some decades, most Ottawa residents would be-hard pressed to identify any of the remaining retailers on that once-vibrant street. Out of sight, out of mind!

In my view, the key challenge for Rideau Street has been and remains marketing itself as an appealing destination. That’s the challenge all older retail areas in the urban core face. They have to figure out what their differentiator is, lever that to the marketing max, and deal with any issues that foster a negative image.

These local retail destinations can’t compete on price with larger or suburban venues. They have to offer something different.

Lever all possible strengths

In Rideau Street’s case, it has one big advantage – it’s between two high-profile destinations that already get plenty of traffic. Sure, it’s competing with the ByWard Market and the Rideau Centre, but those destinations help bring shoppers and tourists downtown.

For anyone who can recall the Market before 1970, a tourist destination it was not. Now it’s just a matter of getting those customers to walk that extra block. As long as there is still pedestrian access when Rideau Street is ripped up, there is still opportunity to draw business in the door.

The BIA just has to work with the city to make sure consumers with money to spend aren’t spooked away by riffraff up to no good.

To discuss this or any other valuation topic in the context of your property, please contact me at [email protected]. I am also interested in your feedback and suggestions for future articles.

John Clark is Vice President with The Regional Group of Companies Inc. He has more than 33 years of experience in the real estate appraisal field, is a fully accredited…

Read more

John Clark is Vice President with The Regional Group of Companies Inc. He has more than 33 years of experience in the real estate appraisal field, is a fully accredited…

Read more

Industry Events