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Canada’s biggest shopping malls scramble for anchor tenants in wake of Nordstrom’s departure

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A shopper exits Nordstrom Rack in Toronto on Mar. 3, following news the department store will be closing all Canadian Nordstrom and Nordstrom Rack locations.Tijana Martin/The Globe and Mail

Mall owners across the country are scrambling to replace Nordstrom Inc. JWN-N department stores as anchor tenants, after the U.S. luxury retailer said it will wind down its Canadian operations.

On Thursday, Seattle-based Nordstrom announced it will close all of its 13 outlets in Canada and lay off its 2,500 employees in British Columbia, Alberta and Ontario, just nine years after opening its first Canadian store, in Calgary.

The company filed for creditor protection in Canada and revealed it had invested US$775-million in its stores here, yet never turned a profit on them. It plans to liquidate inventory and close the stores by June.

“Despite our team’s best efforts, including multiple initiatives to improve our outcomes, our Canadian business has not been profitable,” chief executive Erik Nordstrom said in a conference call. “The impact from COVID drove further losses with no realistic path to sustainable profitability.”

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Nordstrom lost $95-million in Canada over the past 12 months, on sales of $515-million, according to a court filing. In addition to COVID-19, the company said, high operating costs and a “lack of brand awareness” undermined performance. Nordstrom, founded as a shoe store in 1901, has 350 outlets in North America. Its U.S. stores, many of which include spas and high-end restaurants, are consistently profitable.

The closings of the company’s six Canadian Nordstrom stores and seven Nordstrom Rack discount stores will eliminate anchor tenants in several of the country’s largest malls, including Vancouver’s Pacific Centre, Calgary’s Chinook Centre, Ottawa’s Rideau Centre and Toronto’s Sherway Gardens, Yorkdale and Eaton Centre. Landlords stand to lose rent from Nordstrom – which can legally break leases after filing for creditor protection – and could face requests for rent reductions from other tenants, if customer traffic declines as a result of Nordstrom’s absence.

“Backfilling the larger full-line Nordstrom stores could prove challenging and costly, particularly given the size of the boxes,” real estate analysts at RBC Capital Markets said in a report. Nordstrom is the second major retailer to close down its Canadian operations in as many months, after Bed Bath & Beyond revealed plans in February to shut 65 Canadian stores.

“Retail closures and bankruptcies could rise in the year ahead, particularly as economic traction slips,” the RBC analysts added.

Nordstrom is an anchor tenant in three Cadillac Fairview Corp. Ltd. properties, including the Eaton Centre, the country’s most-visited mall. Cadillac Fairview is owned by the Ontario Teachers’ Pension Plan.

“Cadillac Fairview is constantly assessing the ever-changing retail landscape,” spokesperson Janine Ramparas said on Friday. “While it’s too early to speculate what we will do with these spaces in the future, our team is working diligently to manage this change and work toward an outcome that is in the best interests of our centres and our long-term success.”

Nordstom’s other landlords include Montreal-based Ivanhoé Cambridge, which rents space to two stores; Vancouver’s QuadReal Property Group; and Toronto-based Oxford Properties. All three are also owned by pension plans. On Friday, the companies declined to comment on Nordstrom’s planned departure.

Commercial real estate experts said it will be difficult for the mall owners to find large enough retailers to take over the Nordstrom spaces, especially in places like the Eaton Centre, where the luxury retailer is spread out over large floor plates across multiple levels.

Even before the pandemic started, mall operators and department store chains had been trying to transform their shopping spaces into destinations, to draw online shoppers to physical retail. For example, some malls have developed co-working spaces.

Mall operators have also had to get rid some of their retail space, or convert it for use as schools, housing or places of worship.

Stan Krawitz, a principal with Avison Young, a commercial real estate brokerage, said Nordstrom’s spaces in many malls will likely have to be divided to attract smaller retailers. He said the Nordstrom exit will be a problem for every landlord, but that it would not be “fatal” for highly sought-after malls like the Eaton Centre, Yorkdale and the Pacific Centre.

Some retail analysts have privately wondered whether Saks Fifth Avenue could be next to pull up stakes. The U.S. luxury chain, which is owned by Hudson’s Bay Company Ltd., has three full-line stores in Calgary and Toronto, and 15 lower-priced Saks Off Fifth locations in Canada, along with its more than 80 Bay department stores.

Richard Baker, the American businessman who has controlled HBC since taking it private in early 2020, said the company has no plans to leave Canada, and is looking to expand its investments here.

“It’s not good news for Canada that another high-quality, well-run department store retailer is choosing to leave the country, but it’s an opportunity for Hudson’s Bay and Saks to grow market share in a very difficult market,” Mr. Baker said. He added that the two chains would be looking at picking up some of the vendors that previously worked with Nordstrom.

“Before the pandemic, and straight through, we invested hundreds of millions of dollars in upgrading our digital experience and improving our overall offering of quality and service at Hudson’s Bay and Saks, and we’re going to continue down that road,” he said.

Mr. Baker also took aim at suggestions that weakness in Canada’s luxury-goods market led Nordstrom to exit.

“Nordstrom closing in Canada has nothing to do with the luxury market. It has to do with a prolonged depression in retail sales in the downtowns of Canada that has impacted them more than they could tolerate,” he said. He added that the Bay’s stores in suburban locations and smaller cities have helped HBC weather decreased foot traffic in large Canadian urban cores.

As for the vacant retail spaces Nordstrom is leaving behind in Canadian malls and shopping centres, Mr. Baker said he’s confident landlords will “re-energize them with new and exciting retailers.” Asked if Hudson’s Bay or Saks is interested in moving in, he declined to respond.

Nordstrom has committed up to $25-million to pay employees for working through to store closings in June, including severance, according to court documents. The retailer has also set aside $2.6-million for bonus payments to keep key personnel on the job, including store managers, department heads and security staff.

Nordstrom estimates that about 10 per cent of its employees, or 250 people, will be eligible for the bonus.

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Calgary breaks all-time record in housing starts but increasing demand keeps inventory low – CBC.ca

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Soaring housing demands in Calgary led to an all-time record for new residential builds last year, but inventory levels of completed and unsold units remained low due to demand outpacing supply.

According to the latest report from Canada Mortgage and Housing Corporation (CMHC), total housing starts increased by 13 per cent in Calgary, reaching a total of 19,579 units with growth across all dwelling types in the city.

That compares to a decline of 0.5 per cent overall for housing starts in the six major Canadian cities surveyed by CMHC.

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Calgary also had the highest housing starts by population.

“Part of the reason why we think that might have happened is that developers are responding to low vacancies in the rental market,” said Adebola Omosola, a housing economics specialist with CMHC.

“The population of Calgary is still growing, a record number of people moved here last year, and we still expect that to remain at least in the short term.”

Earlier this year, the Calgary Real Estate Board also predicted that demand, especially for rental apartments, wouldn’t let up any time soon. 

Industry can cope with demand, expert says

According to numbers from the report, average construction times were higher in 2023 for all dwelling types except for apartments.

The agency’s report suggests the increase in the number of under-construction residential projects might mean builders are operating at or near full capacity.

However, there’s optimism the construction industry can match the increasing need.

Brian Hahn, CEO of BILD Calgary Region, said despite concerns around about construction costs, project timelines and labour shortages, the industry has kept up with the demand for new builds.

Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary region CEO Brian Hahn.
Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary Region chief executive officer Brian Hahn. (Shaun Best/Reuters)

“I’ve heard that kind of conversation at the end of 2022 and I heard it in 2023,” Hahn said.

“Yet here we are early in 2024, and January and February were record numbers again.”

Hahn added he believes the current pace of construction will continue for at least the next six months and that the industry is looking at initiatives to attract more people to the trades.

Increase in row house and apartment construction

Construction growth was largely driven by new apartment projects, making up almost half of the housing starts in Calgary in 2023.

The federal housing agency says 9,034 apartment units were started that year, an increase of 17 per cent from the previous year. Of those, about 54 per cent were purpose-built rentals.

Apartments made up around two-thirds of all units under construction, CMHC said, with the total number of units under construction reaching 23,473.

Growth, however, was seen across all dwelling types. Row homes increased by 34 per cent from the previous year while groundbreaking on single-detached homes grew by two per cent.

“Notwithstanding challenges, our members and the industry counterparts that support them managed to produce a record amount of starts and completions,” Hahn said.

“I have little doubt that the industry will do their very best to keep pace at those levels.”

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Ottawa real estate: House starts down, apartments up in 2023 – CTV News Ottawa

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Rental housing dominated construction in Ottawa last year, according to a new report from the Canada Mortgage and Housing Corporation (CMHC).

Residential construction declined significantly in 2023, with housing starts dropping to 9,245 units, a 19.5 per cent decline from the record high observed in 2022. But while single-detached and row housing starts fell compared to 2022, new construction for rental units and condominiums rose.

“There’s been a shift toward rental construction over the past two years. Rental housing starts made up nearly one third of total starts in 2023, close to double the average of the previous five years,” the report stated.

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Apartment starts reached their highest level since the 1970s.

“The trend toward rental and condominium apartment construction follows increased demand in these market segments due to population growth, households looking for affordable options, and some seniors downsizing to smaller units,” the CMHC said.

Demand from international migration and students, the high cost of home ownership, and people moving to Ottawa from other parts of Ontario were the main drivers for rental housing starts in 2023. The CMHC says rental and condominium apartment starts made up 63 per cent of total starts in 2023, compared to the average of 37 per cent for the period 2018-2022.

There was a modest increase in rental housing starts in 2023 over the record-high seen the year prior and a jump in new condominiums. The report shows 5,846 new apartments were built in Ottawa last year, up 2.1 per cent compared to 2022.

Housing starts in Ottawa by year. (CMHC)

Big demand for condos

The CMHC said condo starts reached a new high in 2023, increasing 3 per cent from 2022 numbers.

“As of the end of 2023, there were only 13 completed and unsold condominium units, highlighting continued demand for new units,” the CMHC said.

Condominum starts increased in areas such as Chinatown, Hintonburg, Vanier and Alta Vista, as well as some suburban areas like Kanata, Stittsville, and western Orléans. Condo apartment construction declined in denser parts of the city like downtown, Lowertown and Centretown, the report says.

Taller buildings are also becoming more common, as the cranes dotting the skyline can attest. The CMHC notes that buildings with more than 20 storeys accounted for nearly 10 per cent of apartment structure starts in 2022 and 2023, compared to an average of 2 per cent over the 2017-2021 period. The number of units per building also rose 7 per cent compared to 2022.

Apartment building heights in Ottawa by year. (CMHC)

Single-detached home construction down significantly

The number of new single-detached homes built in Ottawa last year was the lowest level seen in the city since the mid 1990s, CMHC said.

“The Ottawa area experienced a slowdown in residential construction in 2023, driven by a significant decline in single-detached and row housing starts,” the CMHC said.

Single-detached housing starts were down 45 per cent compared to 2022. Row house starts dropped by 38 per cent compared to 2022, marking a third year of declines in a row.

“Demand for single-detached and row houses also declined in 2023. Higher mortgage rates and home prices have led to a shift in demand toward more affordable rental and condominium units,” the report said.

There were 1,535 single-detached housing starts in Ottawa last year, 208 new semi-detached homes and 1,678 new row houses.

The majority of single-detached and row housing starts were built in suburban communities such as Barrhaven, Stittsville, Kanata, Orléans and rural parts of the city.

“Increased construction costs resulting from higher financing rates and inflation that occurred in 2022 and 2023 contributed to the decline in construction in the region,” the CMHC said. 

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Trump’s media company ticker leads to fleeting windfall for some investors

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A man looks at a screen that displays trading information about shares of Truth Social and Trump Media & Technology Group, outside the Nasdaq Market site in New York City, U.S., March 26.Brendan McDermid/Reuters

Possible confusion over the new stock symbol for former President Donald Trump’s Truth Social (DJT-Q) saw some investor brokerage balances briefly jump by hundreds of thousands of dollars on Tuesday, the first day Trump’s “DJT” ticker traded.

Several people complained on social media about briefly seeing the value of their DJT stock holdings on Charles Schwab platforms inflated to figures more in line with what they would be worth if the shares traded at the level of the Dow Jones Transportation Average.

Some users said they faced a similar issue in pre-market hours on Morgan Stanley’s E*Trade trading platform.

Shares of Trump Media & Technology Group opened Tuesday at $70.90, while the Dow Jones Transportation Average started the session at 15,937.73 points.

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For one trader, the Schwab brokerage balance jumped by more than $1 million due to the error, according to a screen grab shared on social media platform X. Reuters was unable to contact the trader or independently verify the brokerage balance.

“It sure was nice seeing millions in the account, even if it wasn’t real,” another person, going by the username @DanielBenjamin8, who faced the issue in his E*Trade account, posted on X.

Two X users and one on Reddit surmised that the inflated balances were due to the ticker symbol for the company being nearly identical to the index.

A spokeswoman for Charles Schwab said that certain users on some of Schwab’s trading platforms saw their brokerage balances briefly inflated due to a technical issue.

The issue has been resolved and investors are able to trade equities and options on Schwab platforms, she said. Schwab declined to describe the exact cause of the issue.

E*Trade did not immediately respond to a request for comment outside of regular business hours.

Trump Media & Technology Group and S&P Dow Jones Indices, which maintains the Dow Jones Transportation Average Index, did not immediately comment on the issue.

While social media users said the issue appeared to have been resolved, many rued not being able to cash out their supposed gains from the error.

“I better go tell my boss that I’m actually not retiring,” the trader whose account balance had briefly jump by more than $1 million, wrote on X.

Trump Media & Technology Group shares surged more than 36% on Tuesday in their debut on the Nasdaq that comes more than two years since its merger with a blank-check firm was announced.

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