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Downtown doing fine, sees lowest “churn” rate in 10 years

BDBA logoEver wonder why you see a business pop up one month and down shortly after? Businesses in the downtown core of Burlington are coming or going every year, and the Burlington Downtown Business Association (BDBA) has collected data on this topic.

The BDBA is an association that represents and promotes 430 businesses within the downtown boundaries. Each property owner pays a special levy to support the organization, which is how the BDBA can create programs or hold events. Volunteers also contribute to the programs and events by the BDBA. The goals are to make sure the downtown is an attractive place where people enjoy spending time.

From 2007 to 2015, 318 businesses opened within the BDBA boundaries, and 319 businesses closed. The businesses in this data include retail, personal services, restaurants, and professionals. As the chart below indicates, there was more volatility in the retail sector than professional services.

I had the opportunity to ask Brian Dean, General Manger of the BDBA, what the numbers mean for the downtown.

Purple shows news BDBA boundaries.
Purple shows new BDBA boundaries.

Vacancies and turnovers: lowest “churn” in 10 years

Just because a business has closed in the BDBA boundary, he said,  doesn’t mean that business is closed for good. Business owners might have just retired, or relocated (often for larger space) outside the BDBA boundaries. The BDBA tries to conduct entry and exit surveys for each business. The purpose of the entry survey is to see what the business is hoping to gain from being in this location and how they can strive. “We want them to take full advantage of the membership they are paying for,” says Dean. “They are only as strong as their participation.”

Exit surveys are a little harder to conduct since businesses sometimes leave with little warning. The goal in conducting “exit surveys” is to “learn if there are systemic issues affecting the health of the small business community and subsequently if the BDBA has a role to play in affecting these issues,” said Bob Martin, out-going chair of the BDBA board, at the April annual general meeting.

The churn rate is the sum of businesses that have both entered and exited in a given year as a percentage of the overall membership. The industry standard amongst BIAs is that a 15-20% “churn rate” is a red flag. It is indicative of a volatile business environment.

The churn rate for downtown Burlington in 2015 was approximately 8%. “This is the lowest it has been in 10 years and this is a good sign,  Martin told the AGM. “It translates into a more stable, sustainable environment with less volatility that we have witnessed in a decade.”

As for the vacancy rate downtown, it can be difficult to measure because it can change almost daily, says Dean. The vacancy rate is the amount of total or potential commercial space that is unoccupied versus buildings that are occupied in the downtown core.

The latest figures available for downtown’s vacancy rate are from 2012. At that time the retail and service/commercial vacancy rate was 11.2%. It was considered medium/high with a typical rate ranging between 5-8%.

According to information provided by Martin at the AGM, analysis of the vacancies concluded that most of the vacant space was concentrated in three aging commercial plazas. Excluding these three centres the balance of the downtown is only 4.8%  vacant – “a very healthy level,” he said.

Since 2012, one of these centres has been demolished and is slated for a new development. Another has been purchased by a new owner who is actively merchandising the building, including the relocation of a corporate head office to the top floor. The third property has seen a slow but steady increase in commercial tenants by 20% over three years.

Martin said the estimated vacancy rate for the downtown in 2016 is approximately 7%. By comparison, office vacancy across the city of Burlington in the fourth quarter of 2015 was approximately 22%.

When comparing the health of the downtown to the rest of the city, the numbers tell part of the story, but they are different customers, Dean told me in an interview. The real competition is with other downtown cities, for example Oakville or Milton. To meet the competition, says Dean, it’s important to keep the downtown relevant, and also to promote the downtown to people who live in other areas. “If we can be a primary strength for dining, we push that hard,” he said.

In order to proactively fill vacant spaces downtown and market the area as a place to do business, the BDBA board took the unprecedented step of hiring the services of a retail specialist, Mary Vallee, who will research and contact businesses that may have an interest in locating in a downtown setting. Vallee is actively matching up these interests with property owners that have known or foreseeable commercial vacancies.

As the interview came to an end, I asked Dean about if he feels confident in downtown’s business future. “Absolutely,” he said, without hesitation. Based on the past he is also excited for the future because of young entrepreneurs coming to Burlington. When you examine the numbers themselves, he added, some years have a net loss and some have a plus. We also discussed how “property ownerships patterns are solidifying”, and how stores are starting to branch out in the downtown. With such promising and motivated people moving to Burlington to start their careers, it will be great for the downtown core, he says.

Sector Mix: It isn’t what you think

Business Composition 2015 by SectorMy friend’s perception of the downtown core is that it’s a hub for going out to eat or shopping, which I can understand. After looking over this data, it’s clear that the downtown isn’t what we thought it is. In fact, retail and restaurants make up the smallest composition of businesses as the pie chart shows. Professionals (lawyers/doctors) and professional services (hair salons, spas) make up 70% of businesses downtown, retail and restaurants the remaining 30%. As a result, I can tell my friends that no, the downtown is not all food and shopping related.

The chart also shows that while retail businesses saw more businesses leaving than coming throughout the years, personal service businesses did very well. Below is the sector breakdown, as well as the year over year statistics of openings and closing.

2007-2015 2015
Sector In Out In Out
Retail 75 97 6 7
Personal Services 126 103 3 1
Restaurants 45 38 2 6
Professionals 72 81 2 4

2008 and 2013 saw the highest number of businesses leaving, net of new businesses, while 2007 and 2010 saw the highest number of businesses entering downtown, net of departures.

Entry/Exit Statistics – Overview
Year Businesses Opened Businesses Closed Net
2007 36 23 13
2008 32 45 -13
2009 47 41 6
2010 55 43 12
2011 35 40 -5
2012 33 37 -4
2013 37 48 -11
2014 30 24 6
2015 13 18 -5
Total 318 319 -1

Our downtown is filled with diverse businesses, instead of the same old chain stores. Now that I have become aware of the businesses that are located upstairs from many well-known places, I understand the business composition. For example, I’ve been in and around Pane Fresco quite a bit, but I had no idea that above it was the BDBA and two other organizations. There are businesses and associations throughout the downtown, not just on Brant Street, so there’s more than what you see.

Claire’s Take:

I had the opportunity to attend the AGM. and a BDBA board meeting. t was the first business meeting I have ever attended. After going through trial and error as to which staircase I was suppose to use, I found the BDBA meeting room. It was a little daunting at first to walk into the room, since the other people attending the meeting were giving me a quick look as to why a teenager is in their room. I arrived just before Councillor Marianne Meed Ward, so had to introduce myself. They all welcomed me in to take a seat, and the meeting began.

It was quite interesting to see how issues were discussed, how people would make their comments, and to also see the dynamics of the group.

As we made our way back to City Hall, I couldn’t help but say how interesting that experience was. This was my first interview that I’ve done, and it was something new for me. I’m grateful that Brian Dean could talk to me and answer my questions so I could incorporate them into this article! It makes me excited to think about any other future interviews that I’ll be doing for articles as well.

Marianne’s Take:

Residents and businesses become understandably concerned when they see a vacancy sign on a once-thriving business. The data collected by the BDBA, in statistics, trends and interviews, tells a fuller picture. It’s a reminder that when using any number, it’s important to keep it in context and ask: how does this compare to other areas? To the trends over time?  And most important, What does this mean? Is it good, bad or neutral.

By all measures, the downtown is doing well, and that’s because of the great family of 430 businesses, a dedicated board, and committed volunteers. Downtown had its best year in a decade in 2015 for “churn rate,” but the BDBA board (on which I serve as the Ward 2 Liaison) isn’t sitting back; our retail recruiter is busy selling the downtown to new businesses. We’ll keep tracking, and reporting these numbers, so you can join us in watching the evolution of downtown.

Your Take:

What do you like best about downtown? What could be improved? What businesses would you like to see here? Leave a public comment below, or email me privately at Marianne.meedward@Burlington.ca

7 Comments

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  1. My husband and I are seniors and have recently moved to downtown Burlington (Ghent Ave). For the summer months it would be a benefit to be able to have a walking destination to a closed off mall with restaurants and entertainment (such as the music festival in June) that would be for pedestrians only.. I believe if the downtown were promoted this way for the summer months , the businesses would see a substantial increase in revenue and it would promote more walking (healthy exercise) for people in the surrounding residential area.

  2. Good work Claire. I like your style and the way you present so many facts in an understandable way. Burlington is a great place to live and work.

  3. Compared to where things were 20 years ago the downtown is barely recognizable. I’m glad to see the BDBA push up Brant Street and get some growth going between Caroline and Ghent. A renewed 760 Brant would be a good anchor for this stretch.

  4. As a lifelong Burlington resident, I was very happy when our family relocated to the downtown core three years ago. I love the hustle and bustle, and that we can walk our dog around the core and to the lakefront. The one concern that I have is related to the statistics on the restaurants…hoping that the 2015 data is an anomaly!

  5. Love downtown Burlington – nothing like it in my life experience. I live downtown and can walk, shop, eat, meet friends on the street all without fighting crowds or dealing with the speed and nastiness that comes from high congestion – downtown Burlington is a wonderful little piece of heaven. Some of the downtown merchants have even become my friends – where else can this happen? Can’t wait for the Centro farmers market to open!
    However, I am afraid that the BIG high-density development projects, if built, will kill our people-friendly Burlington.

  6. I moved into the downtown core 2 years ago wanting a walkable community. I enjoy strolling around and visiting the lakefront often. We are lucky to have so much at our finger tips.

What's your take?