One-in-10 storefronts on Vancouver's high streets are vacant

The space of the recently shuttered Starbucks Gastown location at the corner of Water and Cambie streets has been leased to a yet-to-be-announced tenant. (Kenneth Chan/Daily Hive)

All things considered, Metro Vancouver’s economic performance is relatively strong, based on Vancouver Economic Commission’s (VEC) newly released Spring 2023 economic report compiling numerous statistics sources.

With an unemployment rate of about 4.6% since Summer 2022, the region’s employment levels have returned to pre-pandemic levels, continuing to have the lowest unemployment rate among Canada’s four largest urban areas for most of 2021 and 2022.

But the employment recovery is uneven for youth, who are experiencing a slower return toward pre-pandemic employment levels. Metro Vancouver workers aged 15 to 24 have the weakest employment recovery across Canada’s four major urban areas.

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With the federal government opening the floodgates to immigration, reaching 500,000 newcomers per year by 2025, it is also worthy to note Metro Vancouver’s newcomer employment rate has made some strong gains between pre-pandemic February 2020 and January 2023.

Immigrants who have lived in Metro Vancouver for five or fewer years saw a 6.4% increase in employment, marking the strongest gain when compared to other major cities. This is possibly attributed to the growth of Vancouver’s tech industry.

metro vancouver immigration employment rate

Employment rate by immigration status. (Vancouver Economic Commission)

Many young people, immigrants, and newcomers like students work in retail, restaurant, hospitality, and other service-based businesses. Key to the federal government’s immigration strategy is to help fill positions in the labour market shortage.

According to VEC’s analysis, about 60,000 jobs within the City of Vancouver alone are generated by businesses with a storefront. VEC anticipates such businesses could potentially add up to 20,000 more jobs within Vancouver over the next decade through 2032.

Municipal data shows the overall storefront business vacancy rate on high streets reached 11.9% in 2022, equivalent to about one-in-10 commercial retail units on high streets, representing a year-over-year drop of 0.2%.

The municipal government’s November 2022 report on storefront vacancies, based on a Spring 2022 count, shows the highest storefront vacancy rates are in the business improvement association (BIA) area of Hastings Crossing, where vacancies are a staggering 28%. This is followed by Dunbar Village BIA (17.8%), Point Grey Village BIA (17.5%), Strathcona BIA (16.9%), Chinatown BIA (16.8%), and Robson Street BIA (15.5%).

Out of 22 BIAs across the entire city, the lowest storefront vacancies are in the Kerrisdale BIA (3%), West Broadway BIA (7.4%), Yaletown BIA (8.4%), Commercial Drive BIA (8.6%), and West End BIA (8.9%).

City of Vancouver’s 2022 Storefronts Report on vacancies based on BIA districts. (Vancouver Economic Commission)

But, of course, much has changed over the past year.

Escalating rents and property taxes, rampant inflation in the cost of supply chains and shipping, and growing labour costs due to the worker shortage are increasingly squeezing the financial viability of businesses. These headwinds could persist throughout 2023 and into 2024, when inflation is expected to finally slow down.

The pandemic also greatly accelerated the shift of a higher proportion of sales from brick-and-mortar physical retail locations to online sales.

Some retail districts also endure hardship more than others, specifically Hastings Crossing, Chinatown, and Gastown, due to the spillover of the Downtown Eastside’s social issues stemming from the mental health, addictions, and homeless crisis — associated with violent crime, property theft, vandalism, garbage, and other elements of urban decay. Within these areas, businesses are increasingly finding it challenging to not only attract customers, but to retain and hire workers due to the public safety issues.

Already, over the first few months of 2023, several highly prominent restaurant businesses in Chinatown have announced their permanent closure.

Vancouver City Council recently approved relief measures for businesses, but they have yet to be enacted.

Specific relief measures for Chinatown, such as increased street cleaning and graffiti removal, will not be implemented until starting in the second quarter of 2023 at the earliest.

Earlier this month, City Council approved a lower business property tax burden in 2023, based on reducing the portion of the property tax based on the assessed value of the full redevelopment potential of the property. This relief program specifically targets small businesses, with City staff estimating about 1,360 businesses across Vancouver would qualify, but it remains to be seen whether it will have the intended impact given the focus on smaller and independently owned businesses.

Businesses that are part of large established chains are also struggling in the current conditions, such as Starbucks’ recent surprising decision to shutter its busy longtime location in the heart of Gastown at the northeast corner of the intersection of Water and Cambie streets. However, this former Starbucks space has since been leased to a yet-to-be-announced tenant.

The closure of the 230,000 sq ft Nordstrom flagship store at CF Pacific Centre mall by early Summer 2023 is expected to have a ripple effect on the core of the downtown Vancouver until the large space is filled in by new tenants.

Nordstrom Vancouver liquidation sale begins, captured on March 21, 2023. (Daily Hive Vancouver)

The municipal storefront survey also shows a high proportion of visitations to every retail district are generated by non-local visitors, suggesting businesses cannot rely on local customers alone to sustain their operations.

For example, 58% of Gastown BIA’s visitations in 2021 were non-locals, and about half of the visitations occurred in the evening between 4 pm and 8 pm.

For the Chinatown BIA, 42% of its visitors are non-locals, and an overwhelming 74% of overall visitation is after 4 pm.

Non-locals accounted for 39% of Robson Street BIA’s visitation, and 52% of its visits happened between 4 pm and 8 pm.

Interestingly, Commercial Drive BIA has one of the highest proportions of non-local visitation, accounting for 73% of total visitation. As well, 57% of its visitations are over the evening hours from 4 pm to 8 pm.

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