Going to the wall for the Asian mega-mall
Condo malls – common in Asia, but not in North America – have appealed to new immigrants who want to set up their own business.
The phenomenon is largely responsible for the explosion of Asian malls in the GTA.
Before 1989, all shopping centres were typically owned by developers who leased out their units, according to a Ryerson University study.
In a condominium mall development, units are purchased by individual investors. The owners form a corporation, collectively owning the building and shared spaces. The developer collects a management fee. The first condo mall was the Chinatown Centre in Toronto's downtown Chinatown, built in 1989.
A multitude have been built since then, the most prominent being Markham's Pacific Mall.
A decade ago, Carole Bell, then deputy mayor of Markham, was roundly criticized for saying Asian malls and signs were driving away non-Asians. Today, more than one in three Markham residents identify themselves as ethnic Chinese, and the issue is more likely to be about traffic than anything else.
Tony Wong
Scarborough/Markham border is ground zero as developers battle for share of market
Nov 17, 2007 04:30 AM
TONY WONG
BUSINESS REPORTER
On the site of a former Canadian Tire store in Toronto's east-side Scarborough neighbourhood, Sheldon Esbin is showing off his gleaming new mall.
"This used to be the garage bay," says Esbin, pointing to a restaurant that serves upscale Shanghai cuisine. No oil changes here, but crispy shredded ginger eel will set you back $13.99. Over in what would presumably be sporting goods is a cosmetics boutique. A pint-sized jar of face cream sells for $568.
"You could go on vacation for that," laughs Esbin, CEO of Splendid China Tower, an Asian-themed mall that opened earlier this year.
While most people won't be beating a path to Scarborough to buy pricey face cream, Esbin hopes they'll at least sample some of his other stores once they get over the sticker shock.
At the border between Scarborough and Markham, the neighbourhood surrounding his site has one of the largest residential concentrations of ethnic Chinese in Canada. The area has become ground zero in a battle of developers for the growing Asian market.
Not since the 1970s and 1980s, when Chinese migration moved north to Scarborough, then upward to Markham and Richmond Hill, has there been such a massive amount of planned development in the GTA.
Covering 96,000 square feet at Kennedy Rd. and Steeles Ave., Splendid China is directly across the street from the 270,000-sq.-ft., glass-wrapped Pacific Mall and the separately owned 300,000-sq.-ft. Market Village Mall – which bill themselves as the largest indoor Asian mall complex in North America – on the Markham side.
But that title won't last long. A five-minute drive east at Middlefield and Steeles, another 435,000-sq.-ft. mall is under construction. That mall, its developer says, will claim the title.
But the other malls don't plan to sit idly by. They each have plans to expand; Splendid China by as much as 200,000 square feet and Market Village and Pacific Mall by up to a combined 300,000 square feet.
When the dust is settled, about one million square feet of Chinese retail mall space is in development or being planned for the area – equivalent to a new office skyscraper in downtown Toronto.
"This is the most extensive development we've had in some time. What you are seeing is the birth of a major new shopping district," says Shuguang Wang, chair of the department of geography at Ryerson University, who has written studies on Chinese commercial activity.
A major reason for all the activity is that ethnic Chinese have been the fastest growing immigrant group in Canada over the last two decades, says Wang, and the majority settle in the GTA. Chinese is the third- most-spoken language in Canada, after French and English.
"The malls are appealing to the new waves of immigration that are looking for services," says Wang. While the GTA already has five Chinese districts – in Markham, Mississauga and Scarborough, and two in Toronto – the border between Markham and Scarborough is the new frontier. And right now, it's high noon.
At Scarborough Community Council last month, lawyers for the Markham malls argued expansion at Splendid China could have a severe impact on already clogged roads.
In a battle that promises to become more heated, Splendid China lawyers claimed the Markham malls simply want to delay the application of a competitor.
A decision on the Splendid China application is expected to come before the Ontario Municipal Board in December.
One person who isn't happy about all the new building is Sam Cohen, the developer who created the Pacific Mall more than a decade ago and turned it into Toronto's most successful Asian mall development.
"It's a free country. Anyone can build. But the problem is, if you put a new mall in, you could have a problem with over-saturation. Especially when you have all these malls so close together selling the same items, it becomes like a zoo," says Cohen. "Just because one mall does well, now you have everybody coming at once."
Cohen is worried about traffic spilling over from Splendid China across the street, creating congestion for clients at his mall and impacting his own expansion plans, which may include a hotel on site.
A mechanical engineer by training, the 63-year old developer formed Torgan Group with a partner more than 20 years ago and started building strip plazas and medical buildings throughout the GTA. Cohen says he built Pacific Mall because he "thought it would work well. I imagined a town with streets and avenues and a lot of daylight. So I put in a lot of windows."
Behind Cohen's glass-enclosed Pacific Mall sits the rustic Market Village, with retail shops that would fit into an Anne of Green Gables theme park. Most people think the malls are part of the same development since they share parking space, but they have different owners.
Market Village is the most poignant symbol of the change in Markham's demographic. Built as a general mall, with touches of Victoriana, almost two decades ago, it played up the rural roots of Markham – a place to have tea and crumpets, not dim sum.
More than 10 years ago, sensing change in the area, lawyer and developer Rudy Bratty decided to change it to Asian development. The success of Market Village led to other Asian building in the area, which led to controversial comments by then-deputy mayor Carole Bell that there were too many Asian theme malls in Markham and that "everything's going Chinese." One wonders what she'd say now.
Certainly, with mainland China the No. 1 source of immigration to Canada, and many newcomers settling in the Markham area, the prevailing sentiment is to build – and the bigger the better.
Market Village's expansion has already been zoned and approved by Markham, says the mall's lawyer, Barry Horosko. The expansion, combined with plans by Pacific Mall, would bring another 300,000 square feet of space to the market.
Horosko says his client isn't opposed to the expansion of Splendid China, but wants to make sure the City of Toronto "does a proper job in making sure the necessary road improvements are in place."
Splendid China's Esbin, a lawyer turned investment banker and developer, says he's spending millions on road improvements.
But right now, the malls are competing for consumers. Esbin says they can co-exist, and possibly bring new customers to the area.
"It's about mall wars. We're all trying to get market share, but it's a big market," he said.
The war may exact a toll. Apart from the traffic, the area is also in danger of being overbuilt, with too many retail stores targeting a narrow community, warns Wang.
But all the new development could produce a destination shopping point and potential tourist draw, especially if Canada receives Approved Destination Status with China, which would mean more tourists from the mainland, she says.
"I don't think we will see this kind of intense activity again for a long time," Wang says.
Meanwhile, as the Markham and Scarborough malls fight over future market share, Terry Yiu is busy constructing his 21st-century vision of what an Asian mall should look like.
A five-minute drive east along Steeles Ave. from Splendid China, Yiu broke ground this summer on what must surely be the death star of Asian shopping malls, on a massive 8.5-hectare site in Scarborough.
The 435,000-sq.-ft. first phase will already make it the largest such mall in the Greater Toronto Area.
"We are building a regional mall, not a neighbourhood mall. This will be a destination point for consumers," says the 41-year-old developer, who has another 8.1 hectares to work with for phase two.
Yiu's aiming high, starting with his mall's name.
The Landmark is a legendary mall in Hong Kong's central financial district, housing Christian Dior, Louis Vuitton and China's only Harvey Nichols department store.
The Scarborough Landmark won't have quite the same cachet, but Yiu wants to eschew what he calls the "junky" flea market aesthetic of some Asian malls.
His mall, with the look of a space-aged aircraft hanger, will give a nod to its Canadian farming roots. Two heritage homes, the Underwood House and the William Stone house, will be preserved and placed inside the mall, possibly for use as coffee houses or restaurants.
"People shop in Canada for needs. But people shop in Hong Kong for wants. Shopping is like a religion in Hong Kong," says Yiu, who grew up in Hong Kong before moving to Canada to study chemistry at the University of Guelph. "This design is the culmination of shopping for three years in malls around Asia."
The first phase will offer shopping and entertainment zones, and Yiu's open to ideas for the second phase. "The sky's the limit," he says.
"It's a chance to build something special."
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