New Horizon Mall remains virtually empty causing concern for analyst

WATCH: CityNews reporter Jon Muma heard from one analyst on whether the business model for New Horizon Mall is sustainable.

CALGARY (CITYNEWS) – It was billed as an international shopping destination when it opened earlier this year, yet months later it’s mostly empty inside.

New Horizon, billed as Canada’s second largest mall, is a 320,000 square foot building with 500 units for retailers and 26 restaurants and all of them are sold.

Several months after opening its doors to the public, and a month before the official grand opening, the mall sits mostly empty.

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What’s unique about this business model is that space is purchased outright, more like a condominium, and then the owner can either set up a business in the location or lease it.

The mall opened in the spring, but only a few businesses are operating, despite the website saying 500 units are expected to be filled.

“I certainly wouldn’t want to be involved in this project at this stage. I think it would be quite stressful,” Craig Patterson, the director of applied research at the University of Alberta School of Retailing said.

“It’s interesting. They set up a condominium model for retail space. It’s not too common. Most of the time, you’ve got a shopping centre like CF Chinook Centre,” Patterson explained. “Those spaces are being leased by the retailers that are in there. So the New Horizon Mall is a condominium model. It has a lot of smaller retail spaces that businesses can buy and it’s an interesting situation there because it leads to a lot of uncertainty in terms of tenants.”

It’s modeled on what many consider the successful Pacific Mall in Toronto. But this is a first for southern Alberta and unlike Toronto, the mall is located a good 15-minute drive from the city centre and Calgary doesn’t have the community to support it.

“I think that’s one of the challenges but you know Cross Iron Mills is not technically in Calgary either. I think really it’s having a diverse mix of retailers. It’s really important for any shopping centre, (whether) at a high-end mall or an outlet mall and in the case of New Horizon it barely has any retailers at all.”

He says the mall operators have to make it worthwhile for customers to drive out.

“The question is why would anybody go to that shopping center? I think it needs that critical mass of retailers. It appears to have just a couple that are currently open. So I mean they really shouldn’t be open at this time without a better mix of retailers because people are going to see this and never ever, ever go.”

“In this case, you could have ten places that could fix your phone or could sell you a phone case with Hello Kitty on it, but I don’t think that’s going to be best for a mall mix.”

Patterson says even one marquis store could change the fate of the mall.

“I think a lot of developers now that are looking at department stores as not being that critical to their property. So in this case with New Horizon, I don’t see anything specifically wrong there. However, I think an anchor is something that drives people in. (Whether it’s) a terrific cinema, or the Rec Room which is going into CF Market Mall or really great food or restaurants.”

CityNews reached out to New Horizon Mall to find out how much sold space has been leased, and how many businesses will be in place for the grand opening, but at the time of publishing, it has not responded.

The grand opening takes place October 27th, so there is still time to fill the building.