Avison Young 2022 retail insights now available

Lethbridge, Alberta – Avison Young has released the Lethbridge Retail Market Report, noting that there has been a prominent shift in the local restaurant market, with quick-service restaurant (QSR) concepts outnumbering large format sit-down restaurants 10-to-1 in the Lethbridge market since 2020. Tenant demand has moved away from the traditional sit-down restaurant in favour of QSR options such as mobile orders, drive-thrus, and curbside pick up.

“We have seen a decrease in QSR space size by 10-20% on average with concepts eliminating most of their seating capacity, often keeping their number of seats to 10 and under,” said Jeremy Roden, Executive Vice President in the Avison Young Lethbridge office.

Avison Young has seen a parallel trend of increasing storage and warehouse space, while utilizing minimum storefront square footage. For example, a new food concept tenant in South Lethbridge has designed a minimum, full-service storefront and will utilize shipping containers stored in the back lot for additional stock in anticipation of supply-chain issues.

“National restaurant and QSR chains have been increasingly backfilling into smaller markets,” said Roden. “Taking advantage of the ‘pick-up-and-go’ mentality, these food concepts have been successful in secondary markets when they have direct exposure to their customer base in residential neighbourhoods.”

The COVID-19 pandemic caused an unprecedented shift in retail practice with pick-up and delivery services becoming a crucial component of many business models. The trend of restaurant space shrinking continues and will likely persist for the next two to three years.

“In the first full year following the onset of COVID-19 quick-service outlets have fared far better than competitors. One could argue that quick service food concepts have become one of the hottest retail growth areas in 2022,” said Shane Garner, Associate in the Avison Young Lethbridge office.

Lease rates vary in different areas of the City of Lethbridge, but key factors such as building age, location, and overall demand consistently influence retail lease rates. Overall, the average Net Rental Rate is currently $20.31 per square foot (psf), and the average Additional Rent is currently $9.26 psf.

Retail vacancy has remained stable in the Lethbridge market and currently sits at 3% compared to 2.5% in Q3 of 2021. Being situated in an agricultural area and not being as dependant upon the oil industry, fluctuations in the economy are less severe in Lethbridge than the provincial average.
 

 

View Lethbridge Retail Market Report