Toronto’s Bloor-Yorkville neighbourhood is home to the fifth-most expensive retail corridor in North America and a number of factors have lined up to keep it that way, according to a new JLL report.
“Bloor-Yorkville is representative of what is happening in the Toronto urban market and high-street retail,” Tim Sanderson, executive vice-president and national practice lead of JLL’s retail division in Canada, told RENX. “Toronto is by far the most active real estate city in North America, with more operating tower cranes than New York, Los Angeles and Chicago combined.”
Bloor-Yorkville is well-situated between Avenue Road and Yonge Street at the axis of Toronto’s east-west and north-south subway lines. It’s also in close proximity to some of the city’s wealthiest neighbourhoods — including Rosedale, The Annex and Forest Hill.
Luxury condominiums and hotels in the heart of the corridor have also driven wealthy residents and visitors to the area.
While Yorkville was a Bohemian hangout in the 1960s, the establishment of Holt Renfrew and Manulife Centre in the ’70s and Harry Rosen in the ’80s — as well as a more recent influx of international luxury brands — have made the neighbourhood the place to be for high-end retailers and shoppers.
$430-per-square-foot rents in Bloor-Yorkville
The annual prime asking rent on Bloor Street last year was about $430 per square foot (all figures Canadian).
While that’s well behind New York City’s Upper Fifth Avenue ($3,610), Los Angeles’ Beverly Hills Triangle ($1,460), San Francisco’s Union Square ($795) and Chicago’s Michigan Avenue ($595), it’s still significantly higher than the only other Canadian retail corridor to make the top 10: Vancouver’s Robson Street, which ranked ninth at $300.
However, competition for land by high-rise developers has driven property prices up in the area, increasing valuations and property taxes. This hasn’t resonated well with retailers experiencing narrowed operating margins, and some have opted to move northwards off Bloor to more affordable streets in the neighbourhood.
“For historical reasons, international retailers remain concentrated on Bloor Street, but the trend towards adjacent streets within the node applies even to them,” said Sanderson. “We’ve seen Off-White, Chanel and Louboutin moving to Yorkville Avenue, and more recently Brunello Cucinelli, Versace and Stone Island.”
Sanderson said retail rents have been relatively stable on Bloor for the past decade, and much of the rental growth that could have happened there took place on adjacent streets. He cited Yorkville Avenue and Cumberland Street to the north as examples.
The stretch of Yorkville Avenue between Hazelton Avenue and Bellair Street has seen rents rise from the $85 to $130 range to the $150 to $230 range, virtually doubling in a matter of a few years.
“First Capital (FCR-T) is busy buying up as much real estate as they can get their hands on in Yorkville, and paying top dollar for it, hence driving up rents,” said Sanderson, who noted the company’s redevelopment of 101 Yorkville Avenue. “The delta in rents between Bloor and Yorkville is smaller than it has ever been.”
Wealth in Bloor-Yorkville
There are 12 large-scale construction projects underway within the corridor and 11 proposed projects in the pipeline waiting for municipal approval, according to the report.
The projects currently in the construction pipeline will more than double the existing residential supply in the neighbourhood, while an additional 3,000 units have been submitted for approval.
As of June, 91 per cent of the units under construction have been pre-sold. With a projected growth rate of 42 per cent over the next four years, Bloor-Yorkville is continuing to foster a population of high spenders.
The average selling price of a new three-bedroom condo in the area hovers around $6.5 million, or $2,200 per square foot.
The average annual household income in Bloor-Yorkville is more than $300,000, 171 per cent higher than in the Toronto metro area.
As these primarily residential projects come on line, they’ll also add approximately 270,000 square feet of new retail space to the existing 2.2 million square feet along the corridor. That will increase inventory by 13 per cent, which will provide ample new opportunities for retailers looking to enter the market.
Sanderson is convinced there’s enough appetite from retailers to fill that space despite the high rents.
“These are part of multi-purpose development projects with thousands of high-end condos, luxury hotel rooms and entertainment spaces,” he said. “So, landlords are bringing not only retail, but also new customers.
“In fact, Bloor-Yorkville is just a sample of what’s happening in the GTA, where approximately 80 per cent of the retail space under construction is already pre-leased at delivery.”
* Mizrahi Developments’ 85-storey The One, at 1 Bloor St. W., will become Canada’s tallest condo and also feature multi-level retail space and the luxury boutique Andaz hotel in addition to 416 residential suites;
* Across the street at 1 Bloor St. E., the recently completed 72-storey tower features 792 condo suites and 85,000 square feet of retail on the ground floor and lower levels. The concourse features a 17,000-square-foot McEwan Gourmet Grocery store with a mix of grocery, grab-and-go items and sit-down dining;
* Morguard Corporation (MRC-T) is revamping 50 Bloor St. W., which is anchored by Holt Renfrew. The department store is undergoing a renovation to its 190,000-square-foot space that will include a new facade designed by Global Design and architecture firm Gensler and a new restaurant concept;
* KingSett Capital is planning a major overhaul of Cumberland Terrace at 2 Bloor St. W. The project, now called Cumberland Square, will add new public open spaces and three towers with 1,507 residential suites as well as retail and office space.
That is far from all of the activity in the area.
“RioCan (REI-UN-T) sold much of its secondary retail portfolio and has reinvested the proceeds into prime high-density, transit-oriented urban areas, including a mixed-use development project with 36,000 square feet of retail at 11 Yorkville,” said Sanderson.
Italian marketplace Eataly is expected to open its first Canadian location by late 2019 at the Manulife Centre at 55 Bloor St. W., occupying 50,000 square feet across three floors. Eataly has had success in other North American markets, attracting new businesses and retailers which want to benefit from its foot traffic and overall popularity.
“Because many retailers choose to establish flagship stores and try new ideas in the area, Bloor-Yorkville has closely accompanied the changes and trends in retail,” said Sanderson. “We’ve observed that landlords are seeking to add food and entertainment and drive more foot traffic.”
Other recent trends include online brands opening brick-and-mortar shops, and cannabis stores. Edmonton-based cannabis retail chain Fire & Flower will share a block on Bloor with luxury leather brand MCM and H&M’s higher-end brand, COS.
Vancouver’s Robson, other prime retail streets
While Robson has the highest retail rents in Vancouver, Sanderson said Alberni, Thurlow and Burrard streets have become the preferred locations for high-end retailers and shoppers.
However, Robson is still popular with mainstream high-traffic retailers and has become a landmark location that brings people together for major events.
“Although development plans have certainly put pressure on local retailers and reduced the number of affordable options, we would expect Robson rents to remain steady,” said Sanderson.
“Alberni rents have already doubled in the past 10 years and will possibly reach rates equivalent to Bloor. As long as we continue to see a steady influx of foreign tourists, luxury retail will be able to absorb higher rental rates.”