Turnaround at Galeries des Sources
West Island shopping centre converts to Outlet Format

When Gilbert Vocelle became vice-president (operations) at the property management firm Ivanhoe, in 1996, things were going poorly at one of its holdings: Galeries des Sources, the Dollard-des-Ormeaux shopping centre.

The complex, which despite its late eighties name change, is still known as the West Island Mall among many of the community's long-time residents, had just lost three major tenants: Consumers Distributing, Club Biz, and Club Optima ­ and was now facing a vacancy rate in excess of 60 per cent.

"It was a low period for the centre," said Vocelle, a former cop, who studied part-time for 10 years to earn his C.G.A. and M.B.A. degrees, before getting into real-estate management. "The retail environment being what it was, we felt that to be successful, we had to try something new."

In 1997, after visiting Dixie Mall, an outlet centre operating in a Toronto suburb, Vocelle became convinced that the concept could work in the West Island, and he immediately commissioned a feasibility study.

"In the United States, manufacturers outlets are more popular, but in Quebec, we decided a retail focus would be better, said Vocelle. "Retailers are happy with the concept since they get a price break of about $5.00 per square foot on their rent, as well as a place where they can unload good quality merchandise." This can mean goods that are out of season, or exist only in odd lots."

The idea met with an enthusiastic response from prospective tenants, and Galeries des Sources is now rented "at about 99 per cent" said Vocelle. About three-quarters of the total is outlets such as Stokes Entrepôt, Pantorama Entrepôt and Pegabo Depot. The balance is made up of conventional retailers such as a Cinemas Guzzo complex and a Canadian Tire store.

Traffic is up as well. Vocelle can't be sure about historical data since door counters were only installed last year, but monthly traffic is now averaging 475,000. This total is up from about 300,000 the previous year, and about 200,000 in 1996.

"What is very unusual for this type of development is that the primary area served by the mall has increased considerably since its conversion," said Vocelle. "In the past only people from the adjoining communities were coming to visit. But with its new focus, the Galeries is now drawing customers from as far away as Hudson."

Vocelle, in his new capacity at Ivanhoe - which is a division of the Caisse de Dépôt et Placement du Québec - has direct operational responsibility for the 32 shopping centres in Quebec and Ontario that the firm manages. These include Les Jardins Dorval, the Beaconsfield and Cote St-Luc Shopping Centres, as well as Les Galeries Lachine.

Most of these malls were part of the real estate group that grocer Sam Steinberg built in the six decades leading up to his death in 1978. As his success grew in the supermarket business he began to run out of new locations in which he could set up new stores. So Steinberg took to building small shopping centres in growing communities, with his supermarkets as the anchor store.

After Sam passed away, stifling labour contracts, and the inertia resulting from a new generation of managers, forced the under-performing company onto the auction block. Ivanhoe emerged as the most prized asset in the group, and was snapped up by the Caisse.

Vocelle, who was brought on board after being groomed in the Caisse's commercial real estate division, remains confident about the future of the local shopping centre. This, in spite of threats emerging from both E-commerce, and the latest craze: "power centres," which are groups of three or four oversized retailers such as Future Shop and Wal-Mart located closely together on huge lots.

"Even if the Internet evolves to the point that you can buy everything you need, there will always be shopping centres," said Vocelle. "People still like to get out of the house and shopping centres give them a place to go. In that sense they fill a social, as well as a business function."

Vocelle is equally sceptical about the future of power centres. "As the population ages do you really see people going into a huge store, buying two or three bags of groceries and walking across a huge parking lot to visit the other stores?"

"I think the shopping centre is going to be with us for a long time to come"

Photo caption: Traffic has gone up at Galeries Des Sources since it converted into an outlet centre last August.

You can contact Diekmeyer at peter@peterdiekmeyer.com

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