Ottawa, Insider Only Top Stories

Closure of The Bay on Rideau would leave ‘gaping hole’ that would be hard to fill, analyst says

March 17, 2025

If Hudson’s Bay liquidates its Rideau Street location in Ottawa, it would leave a “massive gaping hole” in the area, according to one local retail analyst.

Already an Insider? Log in

Get Instant Access to This Article

Become an Ottawa Business Journal Insider and get immediate access to all of our Insider-only content and much more.

Learn More and Become an Insider

If Hudson’s Bay liquidates its Rideau Street location in Ottawa, it would leave a “massive gaping hole” in the area, according to one local retail analyst. On Monday, it was reported that a full liquidation at Canada's oldest company could begin as soon as Tuesday and last for up to 12 weeks, although Hudson’s Bay is still holding out hope that it will find a lifeline. Lawyers for the beleaguered retailer said in an Ontario court Monday morning that if approved by the judge, the liquidation would span all 80 stores as well as three Saks Fifth Avenue stores and 13 Saks Off 5th locations in Canada that it owns through a licensing agreement. In Ottawa, it’s a move that could have ripple effects across an already-struggling area along Rideau Street and into the ByWard Market, according to local retail analyst Bruce Winder. “The ByWard Market is very different overall than it was even 10 or 15 years ago,” Winder told OBJ on Monday. “If and when The Bay liquidates that store, that’s going to put just a massive, massive gaping hole in the ByWard Market.” The five-storey, 31,000-square-metre department store has entrances on Rideau Street and on George Street in the Market. It’s also accessible from the Rideau Centre via an elevated pedestrian bridge. Though Winder said consumers have been losing interest in department stores for decades, The Bay building itself has become a staple of the area. If it closes, its size could be a problem. “The Bay is arguably one of the focal points of the ByWard Market,” he said. “It’s a beautiful store. But if you’re a landlord, what are you going to put in that building? You might be able to argue, okay, the building is self-contained so you might be able to make it into condominiums. But I really doubt there’s any retailer that’s going to be able to come and take all the space.” As department stores and major retail brands like Sears, Zellers and Eaton’s have shut down over the years, Winder said many landlords, especially malls, have been scrambling for ways to fill the giant spaces left behind. These days, there are few retailers big enough to take on the entire building, so divvying up the space between multiple businesses has been a popular option, he said. For example, in the West Edmonton Mall, an old Sears building was chopped into smaller storefronts as well as a car dealership. The Eaton Centre in Toronto is filling the footprint left behind by Nordstrom with Italian restaurant Eataly, a new Nike store and Quebec fashion retailer Simons. Winder added that mixed-use redevelopment, which involves using some of the space for residential, has also become a popular option. “It really varies,” said Winder. “Some malls have tried to put dentists in and doctors. There’s a mall near me where Zellers left and they filled it with pickleball courts. I think the first step would’ve been food courts 10 years ago, but that’s already been done now. Rideau Centre has a beautiful new food court so there’s no need for that.” Winder said it’s increasingly difficult to fill large spaces as companies shrink their footprints and grow their e-commerce platforms. And with the established Rideau Centre across the street – which has yet to fill the space left when Nordstrom closed in 2023 – he said it could be a hard sell to get companies to move into The Bay building. “More retailers want a standalone store,” he said. “It’s cheaper to run than it is in a mall because in a mall space you have to pay your share of the air conditioning and the heat and all the amenities. But it all depends on the kind of mall it is.” International brands looking to expand into Canada are a good potential target, but economic factors may make those efforts more complicated, he said. “Historically, there’s always been a sort of lineup of American or European or Asian retailers who want to expand here,” he said. “Is that going to continue based on the trade war and the uncertainty we have? They may continue, or they may stop. Now normally they don’t start with Ottawa. They start with Toronto and Vancouver as a test market to see how it goes. Only after time do they expand to Ottawa. It was an anomaly that Nordstrom went to Ottawa.”

ByWard foot traffic could take a hit

On the Rideau Street side, the stretch of storefronts near The Bay has been mostly empty for some time, including the location of a former McDonalds and, more recently, Pure Kitchen near the LRT station. A music venue by Live Nation, slated to open in the former two-storey Chapters stores next to The Bay in early 2026, is expected to bring some activity back to the area. On the George Street side of the building, ByWard Market District Authority executive director Zachary Dayler said the Market would feel the impact. “When these stories emerge, whether it’s a national retailer or a smaller retailer, it’s disappointing,” Dayler told OBJ on Monday. “We want to see people succeed. We want our national retailers to succeed. I think what it validates is a shift in the retail landscape that’s sort of self-created from our own habits coming out of the pandemic.” Dayler said the Market fares well when it comes to turnover, often seeing new businesses come in when another one leaves. While that might not change if The Bay closes, he said customer foot traffic could be impacted. “It’s a feeder into the Market district, we know that,” said Dayler. “A significant number of people walk through the Rideau Centre and then take the skywalk or come through The Bay to get here. As an anchor on Rideau Street, it will impact foot traffic. It’s hard to say, one way or another, what that would do to our numbers, but I can tell you anecdotally that yes, having an anchor close is a concern for foot traffic. We want to make sure people flow through the area.” Though the space might be hard to fill, it would also present an opportunity, much like the space recently filled by Live Nation, he added. “A multinational brand saw value and moved in there (to the former Chapters location). I’m not sure that won’t be the case for this location,” Dayler said. “What I would say is slightly more optimistic is that there’s a significant amount of development happening in and around ByWard, whether that be new business, hotels or residential. So this is an opportunity to see that investment and I would hope the city and property owners leverage it to build back to where we want to go with retail, or to help encourage Market conditions in the right direction.” The Canadian Press reported on Monday that the process Hudson’s Bay is proposing would allow the retailer to remove some stores from the liquidation process, should it find sufficient financing during the 10 to 12 weeks when lawyer Ashley Taylor expects the company to offload its inventory. “A quick start will maximize the value of the business ... and preserve whatever chance there is of a restructuring,” Taylor told Ontario Superior Court judge Peter Osborne in a hearing at a Toronto courtroom Monday. The hearing attracted so many lawyers, media and other observers that an overflow room had to be opened for spectators wanting to know what will come of the retailer that dates back to a fur trading company founded in 1670. The hearing was meant to advance a creditor protection case Hudson’s Bay launched on March 7, when it admitted it was struggling with financial difficulties amid subdued consumer spending, Canada-U.S. trade tensions and post-pandemic drops in downtown store traffic. It said the situation has become so bad that it deferred some payments to landlords, service providers and vendors and was days away from being unable to meet payroll obligations. When the company filed for creditor protection, Hudson's Bay lawyer Taylor said the retailer’s plan was to restructure by liquidating half its stores and monetizing some of the leases it holds in prime, high-traffic spaces. That plan was to be carried out under debtor-in-possession financing, which lenders make available to troubled companies in order to help them restructure. Taylor said in the run-up to the March 7 court hearing, the company had two lenders interested in supplying that funding but three hours before, the financing from its chosen suitor “fell apart” and the retailer “scrambled” to get an alternative together. That alternative came in the form of $16 million in funding commitments from U.S.-based investment management firm Restore Capital and other lenders, which were expanded to $23 million soon after. Despite the boost, the commitments weren’t enough to satisfy all of Hudson's Bay's needs, forcing the company to “double” its efforts to find more cash, Taylor said. It’s since reached out to at least 19 potential lenders and major landlords who could offer rent concessions. “To date, the company’s efforts have failed,” Taylor said in court Monday as he described why the company needed to pursue liquidation. Osborne appeared concerned that allowing the company to liquidate and find buyers for its assets — another one of Hudson's Bay's asks — would leave the retailer with little path to restructure, let alone survive. “I want to make sure we haven’t sold the jewels in the crown ... so to make a better outcome impossible,” he said. The liquidation Hudson’s Bay is seeking will span the company’s entire footprint, including its four distribution centres. Ontario will take the biggest hit because it’s where the company has 32 locations, and where more than half of its employees work. B.C. hosts 16 locations, Alberta and Quebec each have 13 and Manitoba, Nova Scotia and Saskatchewan have two per province. Saks Fifth Avenue's Canadian sites are split between Ontario and Alberta and Saks Off 5th has stores in Ontario, B.C., Alberta, Quebec and Manitoba. Elizabeth Pillon, another lawyer who appeared on Hudson’s Bay’s behalf, said the company has about $315 million in inventory on its balance sheet right now and the proposed liquidation will extend to its e-commerce business, which will continue until the company’s Scarborough, Ont., distribution centre empties. The liquidation was opposed by Andrew Hatnay, a lawyer representing employees, who pointed out that the wind down of Hudson's Bay will amount to one of the largest mass terminations in the country since Sears Canada folded. He asked for the court to delay the selloff by one week, saying “once liquidation starts, it becomes a self-fulfilling prophecy" because once customers rush in to buy up all the inventory, Hudson's Bay will be left with so few options to move forward that “the business will be finished.” "Allowing this liquidation to start virtually instantly, seals the fate," he said. The company plans to stop accepting gift cards after April 6 and has already paused its loyalty program, with more than 8.2 million Canadian customers holding about $58.5 million in unused — now useless — points. Hudson’s Bay is also seeking permission to launch a process to find a buyer for some or all of its properties or the business. The process would allow potential buyers to make a bid for some of the company’s leases or just intellectual property, like Hudson’s Bay’s branding or rights to its famed stripes trademarks. The company will also keep seeking financing. Taylor promised it will "cast the net as wide as possible” and look "anywhere we can” for money, but some experts say finding a backer will be no easy feat for a business that has struggled with even “simple” matters like keeping escalators working. “It is a major challenge and no doubt with some large strings attached,” said Lanita Layton, a luxury and retail consultant who was once a vice-president at Holt Renfrew, in an email. “Depending on who — if anyone — does bring the financing, I don’t foresee HBC continuing in the same format.” She says Hudson’s Bay’s most logical path forward would be shrinking the company to a “manageable size” by operating a smaller number of stores more “conducive to today’s customer desires,” which include a unique product mix, experiential opportunities, exciting visuals and great customer service.