Still largely empty New Horizon Mall due for boost with arrival of anchor tenant

Ten months after tenants started moving into the still mostly empty New Horizon Mall just north of Calgary, its first anchor tenant is being announced this week.

That means the grand opening originally scheduled for October could take place at last this spring, says Eli Swirsky, president of The Torgan Group, which developed the Asian bazaar-style centre in conjunction with its partner, MPI Property Group.

The Calgary anchor tenant is The Best Shop, which operates a store described as a "Chinese Walmart" in Toronto's Pacific Mall, a similar shopping centre opened by The Torgan Group about 20 years ago.

Negotiations are nearing completion for an unnamed second anchor store, which Swirsky said is in food merchandising but not a restaurant or grocery store.

"It took two years with Pacific Mall to get to full occupancy and I think we're going to match the same. I think those two anchors are going to provide a major momentum for other tenants to come in," said Swirsky in an interview.

Individual investors

Unlike most shopping centres in Canada, about 70 per cent of New Horizon Mall's retail space has been sold to individual investors who have the option of leasing to others or operating their spaces themselves. The rest of the space about 80,000 square feet is being held by the developer for anchor tenants.

The mall began allowing tenants to set up their shops in May of 2018 but only nine of its 517 spaces were occupied by last September. It says The Best Shop's opening will take the total number of shops to 73.

According to the mall, the store's products will include mahjong tables and an extremely small washing machine that sells for around $100, plus brands such as Haier and Midea that are popular in China but relatively unknown in Canada. It will be the second outlet in Canada.

Best Shop is getting about eight months of free rent and financial help with improvements on its 15,000-square-foot space, Swirsky said, adding the mall is also offering to help unit owners cover the costs of bringing in tenants to occupy spaces they own.

"Everybody wants the traffic to be there so that when they open the business they have the customers outside the front door," said Swirsky, asked to explain why it's taking so long to fill the mall.

"The reality is the more businesses open, the more traffic that will be generated."

Free rent abounds

Tenants at the mall welcomed the anchor signing, while pointing out that rents have been falling steadily since opening due to the lack of customers.

"(My rent) is a good deal. I think there could be a better deal," said Ryan Low-On, who said he's negotiating a reduction in the $2,000 per month he pays for his 450-square-foot custom decal and imported products shop opened last summer.

"A lot of unit holders here are giving out essentially free rent, just pay condo fees for 12 months."

Farther down the echoing hallway, David Chamberlain of Boardgames4Us said he intended to rent out the two 40 square-metre (436-square-foot) units he bought but couldn't find a tenant willing to spend the $6,000 each per month he thinks the spaces should command.

Instead, he decided to convert his online board game and puzzle marketing business into physical stores in December.

"Right now, I'd say we're still in the perception of the glass is half-empty," he said. "So until we start to get more of the units occupied ... we really won't get the benefit of being near CrossIron Mills."

Alina Wu, who opened a clothing alternations shop on Monday, said she's paying only $1,000 per month for her space.

New Horizon Mall is located next to the highly successful CrossIron Mills outlet shopping centre but its location next to a highway in a rural/industrial area is a problem, said retail analyst Maureen Atkinson, a senior partner at J.C. Williams Group of Toronto.

"It's based on an Asian model that's not necessarily applicable in Calgary.... The challenge is it's not in the middle of an Asian community," she said.

"CrossIron Mills has proven that people will go that distance to shop for something different. But whether this (mall) is strong enough to be able to do that is really very questionable."

She conceded that strong anchor tenants will help New Horizon Mall fill its many empty spaces.