SEARS’ CEO QUITS; COULD NORDSTROM SECURE MORE CANADIAN STORE LOCATIONS?

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Sears Canada’s CEO Calvin McDonald has resigned. He leaves behind a struggling retailer which may now be more open to selling back some of its valuable leases to its landlords, possibly leading to more Canadian Nordstorm stores. Not to mention, the possibility of Sears stores being subdivided or being occupied by the likes of La Maison Simons, Saks Fifth Avenue or Holt Renfrew. The following is our analysis of what could replace several valuable Sears locations. 

In the past 14 months, Sears Canada has sold off several of its leases to mall landlords. In the summer of 2012, Sears sold its leases in Vancouver, Calgary and Ottawa, paving the way for Nordstrom’s first Canadian stores. Sears subsequently sold two leases in the Toronto area, resulting in speculation that La Maison Simons may move in. Sears also announced a $1 billion project to redevelop its Burnaby BC real estate at Metrotown. 

But what about Sears Canada’s most valuable retail space? We’re referring to the 816,000 square foot flagship Sears at the Toronto Eaton Centre. Calvin McDonald held on to the store, repeatedly saying that its lease wasn’t up for sale and that it would continue to operate as the chain’s Canadian flagship. With McDonald gone, we think the Toronto Eaton Centre Sears will be sold to landlord Cadillac Fairview for a fortune, and that we’ll see it redeveloped to include at least one anchor store (Nordstrom? La Maison Simons?) as well as other smaller retailers willing to pay good money for prominently-located smaller retail spaces.

Sears Canada has other potentially valuable leases that we think could be sold to landlords, possibly paving the way for more Nordstrom, La Maison Simons and Holt Renfrew locations, and other uses. Here’s our analysis of some of Sears Canada’s more “valuable” spaces:

GREATER TORONTO AREA:

Sears, Sherway Gardens, Toronto: This Sears store is over 225,000 square feet and anchors an entire wing of the mall. Hudson’s Bay anchors the other end. Other anchors include Holt Renfrew (which is possibly staying at Sherway and expanding) and, in 2016, Nordstrom which will open one of two Toronto locations. We would expect Sears space to be subdivided and for part of it to be occupied by the likes of La Maison Simons or even Saks Fifth Avenue.

Sears, Fairview Shopping Centre, Toronto: The 149,600 square foot Sears store could be redeveloped into new mall space or could possibly accommodate retail as well as a La Maison Simons store. We don’t see Saks or Holt’s moving into this mall at the moment. It’s interesting to note that, decades ago, Holt Renfrew had a small store at Fairview.

EDMONTON:

Sears, West Edmonton Mall: This 149,000 square foot Sears would make an excellent location for a new Nordstrom store. And we hear that there have already been talks regarding this possibility. Simons wouldn’t be a possibility as it already has a store at West Edmonton Mall which opened last year. Holt’s or Saks? We’re not sure. 

Sears, Southgate Shopping Centre: At 263,000 square feet, this large Sears is positioned in the mall such that it could be easily subdivided into multiple-tenant retail. Part of its space could be used for a department store be it Nordstrom, Holt Renfrew or Saks Fifth Avenue. As a side note, we’ve heard there are expansion plans for Edmonton’s downtown Holt Renfrew so we’re not sure if a Southgate location would be considered.

MONTREAL: 

Sears, Le Carrefour Laval, suburban Montreal: This 150,000 square foot Sears store is located in one of Canada’s most productive malls, also featuring Hudson’s Bay and La Maison Simons. The space could be subdivided or could possibly become Quebec’s first Nordstrom store, given that it’s the right size. 

Sears, Les Galeries d’Anjou, Montreal: This 147,000 square foot Sears store is in a mall that has seen substantial renovations, including a renovated Hudson’s Bay store and a La Maison Simons store that opened last month. Its value may lie with its subdivision. 

RICHMOND BC: Sears, Richmond Centre: This 122,000 square foot Sears store could be configured into multiple-tenant retail or could be occupied by the likes of Nordstrom or La Maison Simons. Richmond has considerable household wealth, despite income statistics that might indicate otherwise.

CALGARY: Sears, Southcentre: The 234,000 square foot Sears at Southcentre could become part of a mall expansion. Landlord Oxford Properties intends to make improvements to this mall and we’re expecting La Maison Simons to open at Southcentre within the next three years (for those reading closely, we just dropped you a hint).

WINNIPEG: Sears, Polo Park Shopping Centre: The 263,000 square foot Sears store could be converted to multiple-tenant retail and part of it could eventually house either a Nordstrom or La Maison Simons. Holt Renfrew might also consider re-opening a full-sized Winnipeg store, though we’re not aware of any such plans.

The above list is by no means exhaustive – Sears has other excellent retail locations but we’ve limited discussion for now. Please keep reading our website, as we’ll be watching Sears Canada’s real estate closely in the coming months.

[Sears Canada website]

Craig Patterson
Craig Patterson
Located in Toronto, Craig is the Publisher & CEO of Retail Insider Media Ltd. He is also a retail analyst and consultant, Advisor at the University of Alberta School Centre for Cities and Communities in Edmonton, former lawyer and a public speaker. He has studied the Canadian retail landscape for over 25 years and he holds Bachelor of Commerce and Bachelor of Laws Degrees.

7 COMMENTS

  1. In terms of the Toronto Eaton Centre, one thing that people forget is that Sears stepped into the shoes of the old T. Eaton Co. Limited and now enjoys the incredible sweetheart lease terms for that massive space. Eaton's enjoyed favourable lease terms on a number of its stores, but no lease was as favourable as the Toronto Eaton Centre lease (Timothy Eaton started buying up that block in the 19th century). The lease terms have never (as far as I know) been disclosed publicly, but speculation has always been that they pay less for that store than they do a lot of their suburban stores.

    Plus, they moved their head office into the top floors a few years back. Very cheap downtown Toronto office space.

    There is a reason McDonald always refused to vacate the Toronto Eaton Centre store when he was selling off all the other downtown leases. I don't think it was pride over the flagship. It just didn't make economic sense. I'm not necessarily sure that those economics will have changed now that McDonald is gone, unless Cadillac starts offering a lot more money than they have been.

  2. Given the success of its recent renovation, I can't help but think Cadillac-Fairview would want to make better use of its 130,626 square foot Markville location in some way.

  3. I've always believed that the current plan to put Nordstrom on the south side of Sherway Gardens might be a fall back position if Sears didn't/doesn't come available in 2013/2014. If Sears does vacate that store, everyone involved may be able to change tunes & redevelop the Sears into Nordstrom & re-assess a south side expansion after Sporting Life moves to the north side of the mall. Whole Foods? Saks? Simons?

  4. Sears is so sadly downmarket it has always been a blot at the Eaton Centre. Nordstrom or Simons would much better suit the location and the image of the centre and I doubt anyone would miss Sears.

  5. I heard a rumor that some of the old Sears location, including Polo Park in Winnipeg, actually date back far enough that the anchor owned their location instead of leasing them. I think that may be a factor. Something else to keep in mind is that they own a big box stand alone Sears Home store about three blocks north of their Polo Park location. If they gave up the mall proper there may be a possibility of some sort of conversion happening on the Sears Home location to bring it to a main line store.

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