The City of Calgary: Retail Properties

Retail

There are six major retail property types:

Regional Centre
Power Centre
Community Centre
Neighbourhood Centre
Strip Centre
Free Standing

Regional Centres:

This centre type provides general merchandise (a large percentage of which is apparel) and services in full depth and variety. Its main attractions are its anchors. A typical regional centre is usually enclosed with an inward orientation of the stores connected by a common walkway and parking surrounds the outside perimeter. A typical example of a regional centre is Chinook Centre.

Power Centres:

A power centre is dominated by several large anchors, including discount department stores, off-price stores, warehouse clubs, or "category killers," i.e., stores that offer tremendous selection in a particular merchandise category at low prices. The power centre typically consists of several freestanding (unconnected) anchors and a minimum amount of small specialty tenants. A typical example of a power centre is Crowfoot Centre.

Community Centre

A community centre typically offers a wide range of stores with anchor retailers. Among the more common anchors are supermarkets, super drugstores, and discount department stores. A typical example of a community centre is Deervalley Mall.

Neighbourhood Centre

This centre is designed to provide convenience shopping for the day-to-day needs of consumers in the immediate neighbourhood. Most of these centres are anchored by a supermarket or a drugstore. A neighbourhood centre is usually configured as a straight-line strip with no enclosed walkway or mall area, although a canopy may connect the storefronts. A typical example of a neighbourhood centre is Strathcona Square.

Strip Centre

A strip centre is an attached row of stores or service outlets managed as a coherent retail entity, with on-site parking usually located in front of the stores. Open canopies may connect the store fronts, but a strip centre does not have enclosed walkways linking the stores. A strip Centre may be configured in a straight line, or have an "L" or "U" shape. A typical example of a strip centre would be a convenience store with adjoining stores.

Free Standing

Free standing retail is a store situated on its own without adjacent or adjoining stores. A typical example of this would be an individual store or restaurant on Macleod Trail or in Kensington.

Each market area has distinct characteristics that determine its value.

Typically all retail properties are valued with the income approach. The significant characteristics that drive an assessment are:

Size

Key component in determining the overall value of the building
Often correlated with quality

Quality

Quality classification of retail properties

For the purposes of comparison, retail space is generally grouped into three major classes: A, B, and C. Within the centres there are sub-classes to reflect the quality difference within the specific class.

Class A

Most prestigious centres competing for premier retail users with rents above average for the area. Buildings have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence.

Class B

Centres competing for a wide range of users with rents in the average range for the area. Building finishes are fair to good for the area and systems are adequate, but the building does not compete with Class A at the same price.

Class C

Centres competing for tenants requiring functional space at rents below the average for the area.

Location

A retail properties' location is a key factor when determining market value. For assessment purposes, the municipality of Calgary is divided into several distinct economic zones which enable the Assessment business unit to group similar properties with similar characteristics and influences. This, then, assists our assessors to prepare fair and equitable assessments in a diverse area of the city.

Valuation Approach

Retail properties are typically assessed using the income approach to market value. Value = income/capitalization rate