Big Box Vacancy Rate in Canada, 2009-2010

Big Box Vacancy in Canada, 2009-2010. This material is copyright. Not to be reproduced without written permission.

From the effective gross income, a deduction for vacancy allowance and credit loss expense must be made. For a big box store, credit loss is expected to be minimal to virtually non-existent. That’s due to the generally superior credit-worthiness of this tenant-type, compared to almost all other tenants.


However, vacancy loss over a longer period of time might still be expected. Some of that would be due to, potentially, over-supply, changing store formats (meaning the existing size may no longer be viable), and just general economic weakness in an area, format, or sector type.

Home Depot prefer to own their own locations (according to their latest 10K, they own some 89% of their stores, up from 87% a few years previously). According to their 10-K’s (annual report’s) from 2006 to 2010 (five years), Home Depot opened a large number of stores (321) in Canada and the US during that period. They also closed one store outright, and relocated some others. While they don’t provide the store sizes, there are a total of 21 potentially shuttered (closed and relocated) stores during the past five years. Assuming they all remained vacant today and are of average size, this suggests an overall vacancy rate across their combined Canadian and US stores at 1.03%, using the average number of stores open (2043) at year end over those five years.

In Canada, however, only one store has been relocated or closed during that period. Against a 158 average store count, this single relocation (in 2006) implies a possible vacancy rate of just 0.64%, assuming that single store is still vacant today. On the other hand, if only store relocations and vacancies from 2008, 2009, and 2010 (three years) are assumed still vacant, then the combined US/Canadian vacancy rate would be a miniscule 0.32%; the Canadian rate by itself is zero.

Neither Lowe’s nor Rona provide the type of information in their reports that could be used to calculate a big box vacancy rate.

However, there are still some other big box sources available. Statistics from the 2010 Wal-Mart 10-K (annual report) were calculated against their larger-format stores (50,000 sq.ft. and up) listed for sale or lease in the United States. In May 2011, this produced a physical vacancy rate estimate for their big box stores at 1.8%. A similar calculation in March 2009 indicated a 2.1% rate.

However, these statistics must be viewed with some caution. This is because Wal-Mart has been expanding its’ store size as more and more centres move to the much larger supercentre style. This inevitably means that some older stores (e.g. 1980s, early 1990s builds) simply lack the capacity for up-sizing, and Wal-Mart must relocate, producing an empty store. This produces an upward bias in the vacancy number. This phenomenon wouldn’t be expected to affect most other box retailers to any similar extent (except for Target, who is also expanding their number of supercentres too). Home Depot’s average size, for instance, has been stable at 105,000 sq.ft. over the past five years.

In Canada, probably the largest public company housing big box retailers is the Calloway REIT. Calloway focuses almost exclusively on new-format (power centres, big box, etc.) retail development. Over 99% of Calloway’s 24 million sq.ft. is retail, and 30% is rented to big box tenants (Wal-Mart, 25.7%; Canadian Tire/Marks, 4.3%).

That means a large portion of their portfolio resembles the big box economics of the subject. They’ve reported a national occupancy rate exceeding 99% (e.g. less than 1.0% vacancy) in all except one of the past five years (2009, when it was 98.9%, or 1.1% vacancy). However, from information provided in their 2010 report, a separate rate for B.C. could be calculated. The B.C. vacancy rate was only 0.55%, but this covered all their B.C. properties. Of 2.2 million square feet of B.C. space, none of the vacant space was of their big box stores (the largest vacant space was just over 5,000 sq.ft.). Presumably, a similar phenomenon affects the national calculations meaning it’s unlikely they have much, or any, vacant big box space in their portfolio.

Another Canadian REIT generally favouring the retail property sector is Rio-Can. However, Rio-Can has a wider range of retail styles in their portfolio than Calloway, including enclosed centres, urban retail, offices, non-grocery anchored plaza’s, etc., which also elevates their overall vacancy rate. According to their 2010 public filings , Rio-Can’s national vacancy rate over the past two years is 2.8% across their entire Canadian portfolio. The similar number in B.C. is less than half that rate, at just 1.3%. For the new format properties, their vacancy rate across their Canadian portfolio is only 1.1%. New format includes both big box stores, junior boxes, and the surrounding power centre CRU’s. In B.C., there’s no big box vacancy in their portfolio at all.

All of the previous information and breakdown of these statistics illustrate that the B.C. market is stronger than most other Canadian regions, and that the Canadian market is stronger than the US.

Furthermore, it can be concluded that new format retail in general, and big box development in particular, possess superior economics, with limited or rare actual vacancy. Almost all of these sources suggest that any vacancy is more notional than actual. While a reasonable argument could be made for a 0% vacancy and bad debt expense allowance especially in B.C., a more conservative valuation stance has been taken. In this case, an allowance of 1.0% has been made.

Thinking Tools

Here are some very useful thinking tools/processes ...

1. Prioritzing Grid (R.N. Bolles; What Color Is Your Parachute?)
2. SWOT analysis:
3. Causal Mapping Strategic Planning Template
4. The Scientific Method
5. Scientific Method Worksheet
6. Decision Making Booklet

... another random musing

Potential Investments

http://dividendmonk.com/national-presto-npk-dividend-stock-analysis-2010/

also nick (as per crossing wall street)

Migraine or Concussive Headaches

The following recommendations were made by a neurologist to reduce headaches in one specific person suffering from migraine and/or concussive headaches. They involve a spectrum of recommendations, from modern pharmaceutical, to relaxation techniques.

None are designed as a single "silver bullet", but are intended to reduce the frequency and severity of the headaches, over time.

The recommendations include:

1. Yoga for breathing and relaxation techniques;
2. Proper sleep hygiene (here);
3. Magnesium tablets (believed to help migraine sufferers), between 500-1000 mgs daily (known side effect can be loose bowel movements; if so, taper dose down);
4. A three times a day dose of 50 mg of the herb, Butterbur, known to interfere with inflamatory responses in the brain as well as moderating pain (butterburresearch.org);
5. The pharmaceutical, Topamax, an epilepsy medication. These medications are now being used in patients with concussion symptoms, and or various degrees of TBI (Traumatic Brain Injury). This patient is to start at 25 mg once daily (week one); week two is 25 mg twice a day; and at the third week and thereafter is 25 mg x2, twice daily (i.e. 100 mg total). Side effects can include some memory issues, tingling (this means it's working), weight loss, and 1% of patients get kidney stones.

Please seek your own medical opinion from your own health care practitioner for your own particular specific condition.

Buying a used car in British Columbia (BC) Canada

This is a tip sheet for those buying a used car in British Columbia, Canada.

This is more or less geared towards a car that has been registered in BC for some period of time, but some of these resources may prove helpful for others.

Many of these resources require the VIN number of the vehicle, which you can get by asking the vendor to look at his/her insurance papers. This reported number is also located on the dash of the vehicle (you can see it by looking though the front windshield), on the drivers side pillar, and somewhere in the engine compartment. The reported number should be checked against one or several of those numbers on the vehicle, and should be checked for any apparent evidence of tampering.

1. You can check for free to see if the vehicle is stolen at the Canadian Police Information Centre.
2. ICBC provides a list of most-stolen vehicles here, which shows the most-stolen vehicles in different areas of the province. Unfortunately, while it has some utility, it only considers the greatest number of vehicles stolen, and not by percentage of licensed vehicles of that type on the road. (Meaning that, generally, those cars that sell the most will also show up as the most stolen). Still, it can help in making a decision on buying that vehicle, or theft-deterrent devices.
3. The BCAA (British Columbia Automobile Association) has many excellent free resources. Here is an article on buying a used car, the sights and sounds of a lemon, general FAQs, which includes link to "Black Book" pricing for used vehicles, and a link to recall information. They also have an excellent reasonably-priced mobile inspection service. I highly suggest poking around on the BCAA site for other resources they have.
4. What kind of accidents has the vehicle been in? Check here for $20 +GST on ICBC's site to see what payments they've made on a vehicle. Also tells if the vehicle was written off at any point in it's life, while insured by ICBC.
5. One study by an individual reported on the Craigslist site, indicated that 40% of used cars on small independent lots appear to have had their odometers tampered with. Protect yourself, by viewing the previous AirCare records for the vehicle. You can see whether it passed AirCare (emissions controls), and that the mileage claimed makes sense in relation to previously reported mileages on the vehicle. Click on the "Readings for Your Vehicle" link and enter the VIN number.
6. One of the most expensive things when buying a vehicle over it's life, is the cost of fuel. Check what the mileage ratings are at fueleconomy.gov, here (however, it is reported in US MPG). Elsewhere on the the site has the advantage in that some owners self-report mileage, so in addition to EPA ratings, some real-world owners also report. There's also Fuelly.com where you can check a number of folks mileage on many, many vehicles.
7. Check for the reliability of your potential purchase, at the howstuffworks site. Select the vehicle make and model, then, and then the year applicable. Read the experts review, which has a section on the reliability. Don't forget about the excellent Consumer Reports which is unbiased and impartial. Membership is about $30 year.
8. Check to see if there's a loan/lien outstanding on the vehicle, for BC only by going to an ICBC driver services centre with the VIN ($10+GST), or nationwide through CarProof.com (which can also include the accident history, negating the need for item #4), for about $60+GST. You can also check here ppsa.ca and for a relatively small fee ($20 or so), you can check out liens in each province.
9. The Vehicle Sales Authority of BC (a government body that regulates and supports the auto dealer industry) has some good resources, including a series of videos on buying a used car, and how to avoid a "curber" (unregistered dealers, with frequently dodgy ethics) ripoff. In addition to the videos, I recommendyou view this series of tips. The one statistic I found shocking was the VSA's estimation that they believe some 50% of private, used-vehicle sales sold in BC are by curbers. This statistic unfortunately also indicates that, as a group, registered car dealer's would have to be complicit in this, as this would be the only way that the significant supply of used vehicles needed for resale could be provided to these unregistered dealers. You can voice your concern over this matter with the VSA, or with the new car dealers association of BC (their members also receive cars for trade in, and almost all also deal used cars).     

That's about it - happy hunting!

... another random musing

Trouble Sleeping - Sleep Recommendations - Sleep Hygiene

My doctor recently discussed sleep problems with a person I know who has trouble falling asleep at night. His recommendations involved what he called "sleep hygiene".

These recommendations were re-iterated in December 2008 to a person suffering from either concussion-syndrome or migraine headaches.

Sleep hygiene involves several factors, which are known to increase ease of falling asleep at night:

1. Have both a regular bed-time and a regular time to arise in the morning- no varying it all around - set a time and stick with it;
2. Reduce stimulation at night in the hour prior to bed - this includes not listening to loud or jarring music (e.g. rap), reducing television viewing, avoiding MSN chat, etc.;
3. Do not exercise before bed - this stimulates the body;
4. Increase quiet activities in those hours before bed - reading, listening to quiet peaceful music, or meditation fit into this realm;
5. Remove all electronics from the bedroom; IPod, cell phones, etc. The desire to use them, plus potential electronic emissions can stimulate the body to stay awake;
6. Do not eat in the hour before bed - this requires that the body get fired up to process the food - however, a light snack (e.g. vegetable matter of small proportion) may be alright - avoid heavy foods (fatty, sugary, etc.);
7. Take melatonin capsules if needed - this is a natural substance that the body produces (making one feel tired or sleepy) and is non-habit forming (read this: melatonin overdose);
8. "Sleepytime" etc. herbal teas at bedtime may also help - a cup or so 15-30 minutes before scheduled bed-time can help.
9. Do not become over-tired - if you don't get enough sleep and become over-tired, this can increase the difficulty you have falling asleep at night. Get at least eight hours sleep every night. And nine to ten hours if you're between the ages of 10 to 18.

That's about it - I'd also add that the occasional use of a proper sleep herb (please consult your health care advisor here, folks) can assist as well. I've found that Valerian works well for me, but may be contra-indicated in pregnant women or others.

CarpalxQ Keyboard Layout

The layouts you see here are what I have named the CarpalxQ (Carpalx being Mr. Krzywinski's name for the base board; I have added the "Q" to reflect this rendition and the Qwerty heritage), an advanced layout, that achieves the efficiency rivalling the best keyboard layouts (62% of the letters most commonly used in English are directly below the resting fingers, vs only 26% on Qwerty boards), while leaving as much of the Qwerty design alone as possible.

The CarpalxQ achieves this by just six key trades steps (involving only two letters at a time), each of which can be done independently. It is therefore intended to allow a phased transition to this highly efficient board, by just moving the one key trade at a time. By providing a phased transition, a Qwerty boardist can still have decent work productivity, while advancing fairly quickly to a much advanced layout.

Upon completion and reasonable practice, one can reasonably expect to have a much faster typing speed for most people, and less RSI/Carpal Tunnel Syndrome injuries or symptoms. Thanks to Mr. Martin Krzywinski of the BC Cancer Agency for 75-85% of this layout (based off of his "Mod 1" modification of his most efficient layout).

More will likely be coming on this in the future .... for those who wish to remap their boards now, either as a full-out move, or just doing a single step, the actual key trades required for the CarpalxQ optimization involves these six letter trades: 1-E/K, 2-T/F, 3-N/J, 4-I/L, 5-O/; and 6-;/P

For those operating a Windows system, you can go to the Microsoft Keyboard Layout Creator and make your change(s) and then upload them to your system. Repeat until you've achieved full optimization. Go here, to the appropriate Microsoft location. Once again, the CarpalxQ ....