Asia West struggling with growing pains
Martin van den Hemel
staff reporter
Since the early 1990s, strata-title development has changed the face of Richmond.
Before Asia came down with the economic flu, there'd been no shortage of investors intrigued by the concept of the own-your-own store or hotel room.
Those largely foreign dollars helped Parker Place mall become the first strata development in Canada in 1992 and financed more than a dozen other malls and hotels.
"We've charted new territory," Richmond's urban development administrator David McLellan said.
Without strata development, Richmond might never have seen the series of ethnic-themed malls, dubbed collectively as Asia West, built near No. 3 and Cambie Roads, he said.
But Ian Thomas, of Thomas Consultants, said that there is a potential downside to the financing scheme that could wind up leading to the demise of a development.
A key ingredient to a mall's success is having a merchandise mix that targets all facets of the community, he explained. Single-ownership malls like Richmond Centre, Lansdowne Park and Aberdeen Centre lease out their properties, with management in place to ensure tenants sell only permitted products. By controlling uses, these malls have ensured an appealing and diverse tenant mix.
But with a strata mall, where tenants often own and operate their own stores, there's a greater likelihood for shopkeepers to sell whatever they want, he said.
At the recently finished Continental Centre, for example, there are five hair- and beauty salons among about three dozen open stores. That's despite the existing mall bylaw that limits to two the number of stores that can deal in the same product or services, according to the leasing agent.
At least half a dozen stores at the mall also remain closed.
Without a well-rounded tenant mix, it's more difficult for a strip mall to succeed and attract customers hoping to do one-stop shopping, Thomas said.
Urban development's McLellan said he's aware of the upside and downside to strata ownership.
"I know I've had some concerns from the city's perspective."
But there's little the city can do to prevent strata malls from opening up, even if it wanted to.
Overall, strata financing has been more of a blessing to Richmond than a curse, McLellan emphasized.
Strata ownership is commonplace in Hong Kong and many parts of Asia and is a much more attractive concept than leasing. At the current low interest rates, monthly leasing and buying rates are about the same, said realtor Sam Wong, the agent leasing and selling units at Continental Centre. The current construction is the result of work that began two years ago, well before there was a downturn in the Asian economy.
While Wong agrees there are negatives to strata ownership, there are also tremendous positives, he said.
Strata shop owners have more flexibility in selecting their store hours, and have fewer expenses. They also don't rely on an anchor tenant to draw in customers. There's also no concern that growth in the retail sector will result in hikes to rental rates by the landlord.
UBC urban land economics professor Stan Hamilton said strata title financing isn't the cause of a development's success or demise. It's the people that own and operate the shops that make the difference.
"I'm still not convinced that is a problem," he said of strata title ownership.
The problems experienced in strata malls are similar to those found in condo developments, he said.
Neighbors clashing about noise isn't all that different from shopkeepers fighting over parking or which products to sell, Hamilton said.
"There are bum developments and there are good developments."
Realtor Wong predicts the 101-unit Union Square development in north Richmond, expected to be finished this winter, will be the last of the large developments until there's an economic turnaround.
