Apr. 1, 2025 "Vacant Bay stores could spark interest — if landlords are willing to get creative": Today I found this article by Tara Deschamps on BNN Bloomberg:
Retail and real estate experts say the closure of most of the 355-year-old company’s department stores offers a chance to reimagine the country’s most sought-after and high-traffic spaces in malls.
“I think it’s a massive opportunity for landlords to reinvent,” said Kate Camenzuli, vice-president of retail at commercial real estate company CBRE.
“It may take a bit of time, but I think it’s a huge positive because this is the last large-format piece of space that will be and is available in the Canadian marketplace.”
The 74 Hudson’s Bay,
two Saks Fifth Avenue
and 13 Saks Off 5th stores
set to be vacant as Canada’s oldest retailer closes all but six sites typically cover about 120,000 square feet apiece.
Some locations like the Toronto flagship on Yonge Street are enormous: Hudson’s Bay takes over 675,700 square feet there and the adjoining Saks another 175,000 square feet, court documents say.
The retailer’s stores tend to be in Canada’s busiest shopping corridors, making them prime for a reinvention some landlords have quietly been thinking about for years.
“In my landlord days, we had plans on ... resetting the Bays for pretty well, I don’t know, 15 or 20 years, for sure,” said Toran Eggert, who advised landlords before becoming managing partner at Toronto-based real estate brokerage Urban Reform Realty.
Because Hudson’s Bay sold much of its property and took on leases in recent years, any reinvention will largely hinge on the outcome of the company’s creditor protection case.
An Ontario court gave the retailer permission to gather bids from companies wanting to buy or assume its leases. But businesses looking to supplant Hudson’s Bay may have to meet the same terms the retailer agreed to when it obtained the leases.
That would likely require the leaseholder to take over the entire property and could even stipulate the occupant be a department store,
leaving few companies able to meet the requirements.
If no tenant signs on under those circumstances, it’s possible a landlord could start over with a new company, and new lease terms.
Landlords want as much control back as they can get, said Eggert, but few brands other than
Walmart,
Canadian Tire,
La Maison Simons,
The Brick,
Ikea
or grocery stores would want as much space as Hudson’s Bay will leave behind.
“The size of the floor plans are massive, and in today’s world, people just aren’t looking for anything that big and that’s going to be a real challenge,” said Lanita Layton, a luxury and retail consultant who was once a vice-president at Holt Renfrew.
She imagines a European department store could swoop in but thinks it’s much more likely malls will wind up breaking up the space,
mirroring the Eaton Centre in Toronto, where Simons, Eataly and Nike will soon take over two floors previously held by Nordstrom, a U.S. department store which departed in 2023.
If landlords go that route, Layton said there is likely to be interest from more traditional retail brands as well as food hall and entertainment operators.
Camenzuli thinks the Hudson’s Bay departure would allow
escape rooms
or driving or golf simulators
to enter the market, while Kate Black, the Vancouver-based author of “Big Mall,” envisions
pickleball courts
and medical services
joining the mix.
In more dramatic instances, both even see landlords rezoning their anchor tenant sites for residential uses.
However, Black warned some malls, like those in smaller towns, may not get a shot at reinvention because the Bay’s departure will be a death knell for the entire property.
“When those main event tenants like the Bay close down, the rest of the mall is put at threat,” Black said. “So it’s not just the Bay closing, but now the food court is at risk of shutting down.”
But its exit won’t send most premium malls into a tailspin. In fact, it will be “a better win for the shopping centre than having a bit of a big box that has crickets going through it,” said Camenzuli.
She reasons new tenants will generate more traffic and also sign leases that better favour landlords.
Lawyers for Hudson’s Bay landlords have said the retailer’s leases carry “extraordinary” benefits and concessions, including “more favourable rent.”
“Those leases were done quite a while ago, and if they were restructured, they were restructured in the Bay’s favour, so it’s not even close to what market is,” Camenzuli said.
Crafting a new lease with a new tenant won’t be quick. Neither will the time it can take to accommodate the new occupant and any construction they require, said Eggert.
“The whole process can take a couple of years,” she said.
“But mark my words, they’re all on the phone right now making sure that there’s some key interest in their in their sites.”
This report by The Canadian Press was first published April 1, 2025.
Apr. 10, 2025 "Why Simons and Holt Renfrew are unlikely to want all of Hudson’s Bay’s real estate": Today I found this article by Tara Deschamps on BNN Bloomberg:
Because their size and product mix resemble the Bay’s at first glance, the rivals might have seemed like the most logical fit for the millions of square feet the Bay and its sister businesses Saks Fifth Avenue and Saks Off 5th will leave behind, but neither appears to want to take up the ailing retailer’s full mantle.
Holt Renfrew spokesperson Adam Grachnik said in a statement that the luxury retailer was “not considering” making a play for the Bay’s leases but “is committed to helping our colleagues with any opportunities we can provide.”
Simons CEO Bernard Leblanc similarly said his company has “no new announcements planned” but
“is always up for a challenge
and is carefully analyzing all potential opportunities across Canadian markets.“
“We are not rushing things,” he said in a statement.
“We are patient to find
the right opportunity
at the right moment,
in the right place,
and under the right conditions.
Ultimately, our goal isn’t necessarily to be the biggest retailer but rather the best in the eyes of our customers.”
Retail experts say it’s an unsurprising but wise stance for two brands that have preferred to take a slow-and-steady approach to expanding rather than behave like the department store game should be winner takes all.
“Retailers are getting very mindful of the customer still wanting a physical presence but balancing that with not having too much real estate,” said J.C. Williams Group retail strategist Lisa Hutcheson.
If Simons or Holt Renfrew were her clients, she said she wouldn’t encourage them to go after the 74 Bay locations, 13 Saks Off Fifth stores and two Saks Fifth Avenue sites available as Canada’s oldest retailer liquidates all but six of its shops.
Taking over one or two of the sites may be something to consider “down the road” because the
locations are in prime shopping districts
and may be more affordable to obtain because the Bay is in creditor protection, she said.
However, she warns that Canada “only has so much population to be able to support these bigger footprint stores and they would be a big undertaking, even for Simons or Holt Renfrew.
“There’s still a cost to build these stores out,” Hutcheson said.
“Millions goes into them
and it’s not even just
the rent,
but the commitment to fill the store with
inventory
and staff.”
The plan Simons has to open forthcoming locations in Yorkdale and Eaton Centre malls in Toronto,
doors away from two of the last Bay stores,
by this winter was years in the making and part of a $75-million expansion.
It will give the retailer, which got its start in 1840 as a dry goods business, a store count of just 19.
Leblanc has said the number is low because it reflects the company’s penchant for slowly maneuvering into markets rather than barreling through with plans to open on every corner.
“It’s a long play for us,” he told The Canadian Press last spring.
“We have been and will continue to be patient (because) the intent is not to be the biggest.
It’s really to be the best at what we do.”
The modus operandi appears similar at Holt Renfrew, which started as a fur shop in Quebec in 1837.
The business is now known for stocking ritzy designer wares and has just six stores in Canada.
“They decided many, many years ago that they’re not going to bite off more than they can chew,” said Lanita Layton, a luxury and retail consultant who was once a vice-president at Holt Renfrew.
The company’s formula is based around
a high standard of customer service
and a very specific amount of floor space
that allows the retailer to be profitable with the high-end inventory it stocks.
“They don’t want to get into something that they’re not comfortable with and
(when you’re) adding on more square footage,
with every square foot,
you’re adding to your cost,”
she said.
She thinks the brand is unlikely to find many of Hudson’s Bay’s stores attractive simply because they occupy spaces that lack the luxury shoppers the retailer targets.
Even Simons will find some of the Bay properties too large, she said.
“I would imagine each of them is hopefully going to take advantage of what’s happening with the Bay and maybe expanding a little on their home and epicure, but it’s not going to need 100,000 square feet,” Layton said.
This report by The Canadian Press was first published April 10, 2025.
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