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Toronto ranked as the 17th most targeted market for retail expansion in the world according to CBRE’s 2013 edition of How Global is the Business of Retail? CBRE's annual survey maps the global footprint of 320 of the world's top retailers across more than 200 cities and tracks cross-border retailer movements. The report found that retailers expanded into a wide range of markets in 2012 

When comparing new retail entrants by country, Canada tied for 6th overall with 25 new retailers entering the market in 2012. Hong Kong was the world leader with 51 new entrants. An analysis of specific cities revealed that Toronto attracted 15 new entrants into the market enough to rank 17th in the world, on par with Ho Chi Minh City and Moscow. Outside of Toronto, new entrants have been targeting Vancouver, Calgary and Montreal as gateways into the Canadian market.

“Canada remains an attractive destination in a very competitive environment,” said Tom Balkos, Senior Vice President and a Canadian Director of CBRE Limited’s Retailer Services Group. “We spend far more time finding space for major brands than we do convincing them of the need to come to Canada. The fact that Canadian malls are 50 per cent more productive on average than those in the U.S. and that there is less competition in each retail category in Canada has been more than enough to entice retailers to explore Canadian options.”

The report also found that U.S. retailers were the most aggressive by far when expanding store networks globally and they accounted for most of the new entrants into the Canadian market over the past year. Italian, British and French retailers are also highly active, focusing mainly on their own region, although Asia is also a key target for many retailers.

At the sector level, 'Mid-Range' fashion retailers entered more new markets around the world than any other sector last year, accounting for 22% of all new openings, followed by 'Luxury and Business Fashion' retailers (20%). 'Coffee and Restaurants' (13%) is another growth area, as international retailers expand to meet consumer demand for entertainment-based retail. ‘Mid-Range’ fashion retailers were particularly interested in entering the Canadian market. Toronto ranked 4th in the world in 2012 based on its ability to attract new ‘Mid-Range’ fashion retailers and was only bested by Hong Kong, Kiev and London.

Mature markets dominated retailer expansion plans last year, although six emerging markets made the top 20. Paris, London, and New York continue to garnering significant numbers of new entrants, while the top emerging markets included Kiev in second place with 39 new entrants, Sao Paulo (25 new entrants), lasi (19), Muscat (17) and Ho Chi Minh City (15).

One struggle that Canadian cities have in common with many emerging markets is the under supply of quality retail space. This has limited the influx of new retailers into Canada in recent years.

"In general, a lack of new prime retail space globally is limiting the ability of some retailers to meet their expansion plans. This is most notable in mature markets, but also affects many emerging markets where much of the new development is in the peripheral areas of large cities, appealing only to domestic brands. Retailers are also more selective than ever - both in terms of the countries they choose and the type of space they take, with the focus firmly on the best space in the biggest cities,” noted Peter Gold, Head of Cross Border EMEA Retail for CBRE.

A shift is underway in the Canadian retail market, which will allow retailers to enter the country more easily in years to come. A new retail construction cycle is underway which will create new and innovative space for retailers. Landlords are responding to high demand by expanding existing retail centres and building new formats like outlet malls. The national retail inventory will grow by 5.4 million SF in 2013 and new supply is expected to continue to trend above the 5.2 million SF 10-year average going forward. Balkos suggests that new dynamics, especially the churn in the department store sector, are likely to produce the retail availabilities that foreign retailers need to enter and expand in Canada.

“The combination of new construction and rightsizing in the big box category will produce a variety of space opportunities, but it’s going to take a deft hand and understanding of the market to successfully navigate what will be an increasingly dynamic retail environment in Canada,” said Balkos. 

To download a copy of CBRE’s 2013 edition of How Global is the Business of Retail? please click here.