The retail landscape in Canada is changing but St. Albert's economic development team is hoping to keep commercial developments sizeable, and tax dollars flowing.
At a presentation before city council on Monday, executive director Guy Boston asked councillors to approve a new methodology used to assess commercial land supply, and to provide clearer recommendations for the density of commercial developments in the land use bylaw.
Council passed both motions, albeit aware that recent industry papers suggest that many retailers, including Walmart, may begin to look at using smaller spaces.
"Shopping habits have changed," said Coun. Wes Brodhead. "As we go forward in developing the city, I think it's important to keep in mind that our commercial space may become denser just like our residential space."
Expectations for future retail development
A 2013 study by Colliers International found that future retail demand in St. Albert requires about 4.9 million square feet of commercial space, said Boston.
But the city could have more, he said.
Boston said his team has now begun to use the floor area ratio (FAR) in reviewing developers' plans for areas designated for commercial use. The ratio describes the percentage of an undeveloped area that is converted to floor space.
Developers and the city are both interested in seeing the highest possible ratio, he said.
"For every one per cent additional floor area, you can generate another six per cent tax," he said.
Boston said that most floor area ratios in the city range between 15 and 25 per cent, with some developments as low as eight per cent or as high as 44 per cent. For example, Village Landing uses about 21.4 per cent, while the Smart Centre and Walmart site use about 25.8 per cent, he said.
Economic development now wants to focus on achieving a median ratio of 20 per cent for new commercial development, he said.
Applying this median to considerations for existing undeveloped commercial areas, St. Albert has the potential to yield 5.4 million square feet of developed retail space at full build-out, he said.
"This is (500,000 square feet) more than the Colliers study calculated," he said.
He added that this surplus could be further increased with the development of multi-storey retail spaces. But the land use bylaw does not currently provide the text that would allow administration to better negotiate the density of developments, he said.
Setting an expectation for a 20 per cent ratio in the bylaw would make it a significant factor in discussion with developers, he said.
Changing retail landscape
Boston said that recent industry trends suggest that retailers, such as Walmart, are starting to reduce commercial space to compete with the growing successes of online retailers. Smaller retail space is said to be more attractive to shoppers, he said.
While council agreed with Boston's methodology, both Coun. Gilles Prefontaine and Coun. Wes Brodhead asked if administration and economic development had considered how changes to shopping habits might affect St. Albert's commercial developments in the future.
Coun. Hughes asked if Boston was looking to apply the 20 per cent rule to every development and how this would affect businesses, such as gas stations, which may not require that much commercial space.
Boston said that each of the developments would still be considered on a one-off basis.
"But we will have this 20 per cent in our minds when we are reviewing them from an economic development perspective," he said.
