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A Relatively Quiet Year
April 2010
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| Edward Sonshine, Queen’s Council, President and CEO of RioCan |
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By Hayley Mitchell
Edward Sonshine, Queen’s Council, President and CEO of RioCan is responsible for the property management of nearly 38 million square feet of retail and office space across Canada and in the United States.
Admittedly, 2009 was a tougher than average year for RioCan, with a nearly 3 percent loss in square footage rental (approximately 1,200,000 square feet) in the first six months of the year, mainly due to the closure of all Linens and Things stores. To combat the loss of Linens and Things and any other tenant, RioCan was very proactive in finding new tenants. For example they instantly contacted Bed, Bath & Beyond in the United States to offer the newly available Canadian spaces, to which they agreed to take some of the properties. Sonshine also notes that in response to the recession Riocan had to be strict with its tenants – if they were unable to pay, RioCan was forced to shut these retailers out, as knowing there is a vacant spot and being able to look for a new tenant is better than having a non-paying tenant. However, Sonshine notes, “if we thought a tenant could make it [through the recession], we’d work with them.”
Looking forward to 2010, Sonshine believes that the months ahead have to be much smoother than the rough ride of ’09, stating that it will be “a relatively quiet year,” though, “it’s not good yet.” Right now RioCan is past the restructuring season (first quarter of the year) and is at a 97 percent occupancy rate, which is quite positive. The major tenants, however, are still relatively cautious about making long-term lease commitments as the economy is not yet out of the dark, but Sonshine says some large tenants are slowly beginning to talk about 2011, even 2012, commitments.
In addition to holding off on commitments, the major shift that has happened in tenant mindset over the past two years is that tenants are no longer willing to set up shop before the homes are built. Sonshine says that in past, tenants were happy to lease building with the promise of 5,000 or so homes being built in subdivisions around the retail center, but in many cases those promised homes were not built over the last two years, thus making today’s tenant more cautious to only lease where the surrounding community is already established. “They want to be where people already are,” says Sonshine.
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