Local retail leasing experts say it’s still anyone’s guess what will fill the gaping vacancies left behind downtown and in two of Ottawa’s marquee shopping malls after the Bay liquidated its operations earlier this year. The iconic Canadian department store chain, officially known as Hudson’s Bay Company, filed for creditor protection in March. Soon after, […]
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Local retail leasing experts say it’s still anyone’s guess what will fill the gaping vacancies left behind downtown and in two of Ottawa’s marquee shopping malls after the Bay liquidated its operations earlier this year.
The iconic Canadian department store chain, officially known as Hudson’s Bay Company, filed for creditor protection in March. Soon after, the Bay permanently closed all of its stores – including its flagship Ottawa location on Rideau Street and stores in the Bayshore and St. Laurent shopping centres.
Since then, the retailer has begun selling off its leases across the country in an effort to chip away at the roughly $1 billion it owes its creditors. Five were sold to YM Inc., which owns a slew of mall brands including Bluenotes, Urban Planet, Suzy Shier and West 49, for $5.03 million, and Ivanhoe Realities picked up a lease in Burnaby, B.C., for $20,000.
But the fate of the former Bay locations in Ottawa remains uncertain.
Billionaire Ruby Liu, who owns three B.C. malls and a golf course, wanted 28 of the leases to open a new department store named after herself. The sale of the first three leases for $6 million was quickly approved because they covered properties at malls she owns, but the remaining 25 she wants – including those at Bayshore and St. Laurent – have become a hotly contested matter.
Landlords, which include Bayshore owner KingSett Capital and Morguard, which owns the St. Laurent Shopping Centre, are opposed to Liu taking over their leases because they say her plans to open entertainment and dining spaces within the department store she's designing for their properties are not allowed under the leases.
The landlords also say she doesn't have enough expertise to launch a new department store and believe that the project's budget and timelines are unrealistic. They estimate she will need millions more to overhaul properties and suggest the time she has allocated to the renovations, hiring staff and developing a new brand is insufficient.
Hudson's Bay is expected back in court on Thursday and Friday, when it will argue its landlords should be forced to accept Liu’s offer.
But if she doesn’t succeed, those landlords will have to think long and hard about whether to divvy up the former Bay spaces into smaller units or look for another anchor store to replace them, says Ottawa retail real estate broker Jamie Boyce.
Boyce notes that Bayshore, for example, has taken large spaces formerly occupied by retailers that are now defunct or no longer serve the Canadian market – including Eaton’s, Zellers and Target – and turned them over to a number of new users, sometimes subdividing what used to be one store into several units for retailers such as H&M and Mark’s Work Warehouse.
He suggests KingSett Capital could take a similar approach with the former Bay store.
“I think that’s worked very well for that mall and that’s likely an approach that the landlords can positively take,” says Boyce, a senior vice-president with CBRE.
Fellow Ottawa broker Brent Taylor says there is no clear-cut favourite for what might eventually take the Bay’s place at Bayshore and St. Laurent.
“That’s a good question. I really don’t know the answer,” Taylor says, adding he hasn’t heard of any “compelling” tenants that could take “anywhere near” as much space as the Bay occupied in the two Ottawa malls or downtown on Rideau Street.
According to court documents, the department store leased 180,000 square feet of space at Bayshore and 145,000 square feet at St. Laurent.
“I suspect it will be subdivided and be a combination of retail, office and maybe entertainment (uses),” says Taylor, who owns local retail brokerage Brentcom Realty Corp. “But that’s just speculating.”
As for the fate of the biggest Ottawa vacancy left by the Bay – more than 330,000 square feet over five storeys on Rideau Street – Boyce declined to comment.
Toronto-based retail analyst Bruce Winder told OBJ earlier this year it’s becoming increasingly difficult to fill such massive real estate voids as retailers shrink their brick-and-mortar footprints.
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.
“The Bay is arguably one of the focal points of the ByWard Market,” Winder said in an interview in March.
“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.”
– With additional reporting from The Canadian Press
