Developing in a downturn: How retail spaces are expanding on the northeast Avalon

How do retailers ensure success when the unemployment rate is climbing and an increased cost of living looms on the horizon?

Building around community is key to success, local business owners say

Paradise Plaza is the latest shopping centre being constructed on the Avalon Peninsula — a $25-million venture. (Ryan Cooke/CBC)

At a glance from high ground, St. John's doesn't appear to be a city in the midst of a muddled economy.

Tall yellow cranes stretch towards the sky, turning steel beams into places to shop, eat and study. Dump trucks line the streets, carrying crushed rock to new ground for growing business.

From the downtown core to the wealthy east end and the inner-city neighbourhoods, multimillion-dollar deals are being struck to expand retail spaces in the province's capital.

If the economy is in a downturn, Vic Lawlor is chief among the developers who just don't care.

"Once the economy drops a bit, it becomes like a fire sale for everyone," he said. "It's a great development time because costs are usually down 20 or 30 per cent on the construction side."

Vic Lawlor is a developer and businessman in St. John's. (John Pike/CBC)

Lawlor has spent millions on building and renovating spaces all over the city in the last five years.

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A brash and blunt character, he's found success in a gritty neighbourhood as the owner of Ropewalk Plaza — which was a down-on-its-luck strip mall when he bought it in 2013 — as well as a Burger King and KFC on Ropewalk Lane, and three new retail buildings on Cashin Avenue.

The area was once a retail wasteland, populated with vacant storefronts in an area of town on the lower side of the socioeconomic scale.

Big franchises didn't want anything to do with the neighbourhood, Lawlor said, until several local businesses repopulated the plaza.

Household income and retail spending have been on a steady rise, despite an increasing unemployment rate and falling housing starts. (The Economy 2018/Government of Newfoundland and Labrador)

One of the biggest keys to success was proving nearby residents had an interest in retail shopping — something Lawlor says is universal, regardless of average income or other socioeconomic factors.

"Everyone wants affordability. Everyone wants a place where they can go and shop," he said.

Retail on the rise

Lawlor's theory seems to stand up to the statistics.

Housing starts are down, unemployment is up and weekly income is stagnant — but retail sales have never been higher in Newfoundland and Labrador.

People spent more than $9 billion in stores last year, about $1 billion more than the peak of the economic boom. Even when those figures are adjusted for inflation and increases in HST, Newfoundlanders and Labradorians have never spent more money on retail goods than they did in the five years since the boom turned bust.

Crews work to tear out the side of the Avalon Mall, where Sears used to be. Crombie REIT, the owners of the mall, have big plans for future expansions. (Ryan Cooke/CBC)

Retail spending saw a 2.8 per cent jump in 2017 — far below the 6.7 per cent increase seen across Canada, but an increase nonetheless.

The largest driver of that increase was the automotive industry. Vehicle and parts dealers saw a 9.3 per cent increase in sales in 2017, which corresponds with several car dealers buying up land across the province and planning to expand their businesses.

All across the northeast Avalon, one retail trend is easy to spot — strip malls are on the rise.

Ropewalk Plaza is filled to capacity. Ground has been broken and foundations poured for a new shopping centre in Paradise. The Torbay Road Mall has an anchor tenant moving in after several years sitting empty.

Downtown moving uptown

And in Churchill Square, Evan Bursey is breathing a sigh of relief as he watches the "for rent" signs come down from empty store windows.

"A rising tide raises all ships, so I think it's a really good thing," he said of the new stores and restaurants opening around him.

Evan Bursey took a gamble opening his pub and restaurant in Churchill Square — it was quiet at the time, with plenty of vacant storefronts around. (Ryan Cooke/CBC)

Bursey took a gamble last year when he moved his business, the Fort Amherst Pub, to Churchill Square after being flooded out of his downtown location.

At the time, there were plenty of empty spots around. Problems worsened when much of the square was stricken with floods — like some sort of Biblical plague following Bursey from one home to another.

But now there's plans for the long-vacant Dominion store to be replaced with a six-storey condo building, featuring 78 units in total, just a stone's throw from Bursey and other businesses.

In the turn of a few calendar pages, the square has once again become an attractive place to set up shop.

It's drawing attention from downtown business owners as well.

After almost a decade on Water Street, boutique shop Whink is moving into the square later this year. It will be joined by Rocket Bakery, which is opening a satellite location there.

Kelly Mansell has found success with Rocket Bakery by supporting the arts community. Now she hopes to find the same success in a physical community — Churchill Park. (Ryan Cooke/CBC)

For Rocket owner Kelly Mansell, it's a chance to avoid the slower winter season in downtown St. John's.

"In the wintertime here in St. John's the number of tourists drops and things get quieter, and we have a staff of 45 people and we want to keep them working at full capacity," she said. "So opening another outlet just really made sense for us."

Rocket started out in the spring of 2011 and has steadily grown its business since — combining a coffee shop, bakery and a location for small concerts and events.

We see community as a big opportunity for us.- Kelly Mansell

For Mansell, the key to continuing growth since the downturn in 2014 has been growing around a community.

"We try to support the arts and charities as much as we can. And by doing that they help us," she said. "It's a symbiotic relationship."

Now she hopes to grow around a physical community in the Churchill Park neighbourhood, and be part of a network of businesses meeting everyone's needs and wants.

"We see Churchill Square as potentially having that vibrancy," she said. "We see community as a big opportunity for us."

Community is key

Building around a distinct and underserved neighbourhood was the key for Lawlor as well. He credits it as the reason he found success when the economy was on the way down.

He's since invested downtown, spending around $5 million to develop a boutique hotel and commercial space on Duckworth Street.

While he has his eyes on other projects in the downtown core, Lawlor always has ideas for the Ropewalk Lane area.

Looking around the city, he sees other developers following the same model he did — build around people, and success will follow.

"It's their hub, it's their community," Lawlor said. "You get the community itself really supporting the local area."

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