Tsawwassen is an out of the way community that, if wasn’t for the BC Ferry terminal, very few would know about let alone pronounce correctly. But as the country accumulates $2 trillion worth of consumer debt, a majority in mortgages, the spill-over effects into the economy has meant building out where people otherwise wouldn’t build, and not just houses, although there are plenty of those, but shopping malls and restaurants.
Despite this abundance of houses, malls, and restaurants, the Vancouver region apparently needed another super retail complex and thus in 2016, after years of planning and construction, Tsawwassen Mills opened to the public.
The 180+ retail outlet is surrounded by farmland, out by the BC Ferry terminal where one only drives to when one wishes to cross over to Vancouver Island. There is literally no other reason to go all the way out there.
How anyone could think a mall out in the middle of nowhere was a good idea is beyond me, since no traffic is foot traffic, as well, those driving by are either coming to and from the ferry.
Granted, many have stopped in for a quick shopping experience or a bite to eat, but, in an event of an economic downturn, how likely Tsawwassen Mills will survive is open for debate.
While opening day was met with crowds and gridlock, since then, business has dropped off considerably. While anecdotal evidence isn’t conclusive, the food court never seems that lively and a popular restaurant/bar, complete with a bowling alley, was dead on a weekend night. Walking through the mega-complex, it’s almost feels like a Chinese ghost city.
Far from any SkyTrain station and with limited bus access, even the employees need their commute subsidized. The operators of the mall said the place wasn’t built as a regional draw so much as a destination. But the only destination is the Ferry terminal people line up for on the other side of the gates.
So what is one to make of this? Tsawwassen Mills Shopping Centre is the West Coast version of Toronto’s Vaughan Mills, except, of course, that Toronto is a larger metropolis with more surrounding communities than Vancouver.
No wonder people are shorting the malls.
In the United States, according to Bloomberg, Wall Street speculators have zeroed in on “the next U.S. credit crisis: the mall.”
A growing number of firms are positioning to profit from defaulting shopping centres. “Loss severities on mall loans have been meaningfully higher than other areas,” said Michael Yannell, the head of research at Gapstow Capital Partners.
“These malls are dying, and we see very limited prospect of a turnaround in performance,” according to a January report from Alder Hill, which began shorting the securities. “We expect 2017 to be a tipping point.”
After one of the worst Christmas-shopping seasons in recent memory, JC Penny said it plans to shut down 140 stores, Macy’s has closed some 100 outlets, Sears is closing 150 locations and in Canada, Target has proven to be a colossal failure.
With real estate bubbles comes an illusion of wealth. Resources go toward projects that look profitable in the short-run but are eventually revealed to be misguided and wasteful.
Which begs the question, is Tsawwassen Mills Shopping Centre a 1.2 million square foot malinvestment?