Vancouver Int'l Centers Landside Development Project on Designer Outlet Shopping

A new stream of non-aeronautical revenue began flowing for Vancouver International Airport (YVR) when an upscale outlet shopping center opened on airport property in July. The landside development includes 65 stores for designers such as Coach and Armani, and is located just two stops from YVR on Canada's popular rapid transit system.   

The 240,000-square-foot retail center was developed via a 50/50 joint venture between the British Columbian airport and McArthurGlen, a UK-based company that operates 20 similar outlets in Europe. The two partners split development costs equally and will divide subsequent profits in a similar manner. YVR subleases the land to McArthurGlen. 

The idea behind the recent retail foray began several years ago, when the Vancouver Airport Authority decided to develop some of YVR's vacant land that runs along the rail line. "After years of planning and construction, it's very exciting to welcome the community to McArthurGlen Designer Outlet Vancouver Airport," says Craig Richmond, the authority's president and chief executive officer. "Not only will the center become a key tourism destination in our region, it's also important to YVR's role as a key economic driver."

factsfigures Project: Joint Venture Retail Outlet Industry Participant: Vancouver (British Columbia) Int'l Airport  Retail Developer: McArthurGlen Group Location: On airport property; 2 train stops from terminal Outlet Size: 240,000 sq ft Current Stores: 65  Sample Retailers: Armani; Hugo Boss; Coach; Polo Ralph Lauren Visitors Opening Weekend: 160,000  General Contractor: Strabag Est. Jobs Created: 600 Unexpected Challenge: Temporary roadway congestion due to heavy shopping traffic

In addition to creating local jobs, the designer outlet center also adds a new source of non-aeronautical income for YVR. Like other Canadian airports, YVR operates as a not-for-profit entity that reinvests its earnings back into airport development. Revenue from the shopping center will help the airport keep its airline costs low while maintaining high customer service standards, Richmond explains. 

Tony Gugliotta, YVR's senior vice president for business development, notes that the airport received several proposals for various commercial options to develop its rail-side land. "We were attracted to the concept McArthurGlen brought forward and to partnering up and working with them," Gugliotta explains. "The designer outlet center was the development that made the most sense because we thought this would be a good regional draw."

Robert Thurlow, general manager of the shopping center, notes that the new airport property is the only designer outlet in the area. "A lot of the brands that are at our center have had no representation in western Canada - or in some cases, no representation in Canada at all," he notes. 

Last year, YVR earned $210 million in non-aeronautical revenue - $20.5 million more than in 2013. Airport officials declined to reveal revenue projections or development costs for the new shopping center. 

Temporary Traffic Snarls

Having only opened in July, the outlet center at YVR is already making a name for itself. Officials report that more than 160,000 people visited during its opening weekend; and initial sales beat their original targets. 

Thurlow considers the opening day performance a success based on sales at a similar center - Toronto Premium Outlets - that opened two years ago. "Since then, everybody has been trying to beat Toronto's numbers, and we actually achieved that," he relates. "All of the retailers I spoke with reported having had their best Canadian opening performance. It's been thrilling."

The YVR property is McArthurGlen's first move into North America.

Unfortunately, the center's successful debut included a few surprise complications. An estimated 45,000 first-day visitors caused traffic to back up on the road that connects the mainland to Sea Island, where YVR is located. Some departing passengers were caught in the traffic snarl, and three flights were delayed by 5 to 10 minutes each.  

"We quickly adjusted the traffic plan, and we've since been able to accommodate both the passengers going to the airport as well as the shoppers going to the design center," Gugliotta reports. "We had a very comprehensive traffic plan that we were able to tweak."

Despite the outlet center's 2,000 parking spaces, officials encourage shoppers to use public transportation to prevent future traffic problems. "That's a real big issue for us because we want to make sure the airport stays operational," Gugliotta says. 

Ensuring that YVR can operate smoothly and efficiently while further developing the new shopping center will be an ongoing effort. "There has to be a balance," explains Gugliotta. "For an airport to be successful, you have to have the infrastructure and facilities in place to accommodate the airlines and passengers in efficient ways. At the same time, you have to be on the lookout for commercial development opportunities that allow you to generate revenues that you can reinvest in the airport to attract more airlines and make the airport more successful."  

Don't Use the M Word

Architects and designers outfitted the YVR/McArthurGlen shopping center with cobblestone walkways, trees, gentle landscaping, a large piazza and a variety of facades to create an intercontinental atmosphere. "We didn't build a mall; we built a village," Thurlow insists. "It's a beautiful outdoor center. It feels like you're in Europe."

Strabag, the development's Belgium-based general contractor, broke ground on the project in January 2014. "Strabag understands us and understands the level of detail and quality we wanted," Thurlow notes. "It was great to be working with somebody that has built and has known the McArthurGlen standard for a number of years."

The recently completed shopping center occupies about 15% of Sea Island and includes several architectural references to the property's Pacific Northwest locale. Its main entrance, for instance, resembles the roofline of the historic Hotel Vancouver. The design reminds shoppers they are in Vancouver as soon as they walk in, says Thurlow.

In addition to retail outlets, the new shopping center also includes a variety of restaurants with table service rather than grab-and-go food court options, specifies Thurlow. "We like to work with local restaurateurs," he relates. "Everything we do is dining, so everything is restaurant style."

Shop On

With 50 stores ready for opening day, officials anticipate opening 15 more by November. The second phase of the project, which will expand the center to about 100 stores and 400,000 total square feet, is scheduled to begin in early 2017, depending on sales outcomes and demand.

Given the designer outlet center's strong initial showing, airport authority officials are optimistic about how YVR's landside development will affect the overall Vancouver area, which has an estimated population of 2.3 million. The project has already created more than 600 jobs, and the second phase will add even more.

"Our whole focus is on the economic development," Gugliotta relates. "Part of the mandate of the airport authority is to be an economic generator for the region."