Hudson’s Bay Company (HBC) CEO Richard Baker indicates that he may sell some the company’s best stores. HBC owns several massive Canadian flagships, with a combined worth into the hundreds of millions of dollars. Similar to how the company recently sold its Toronto flagship, other Hudson’s Bay stores could be sold to adjacent mall landlords. Proceeds from these sales could renovate existing Hudson’s Bay stores, not to mention fund Saks Fifth Avenue‘s Canadian entry. We’ll provide an analysis of some top locations and what Richard Baker may have planned.
HBC set a precedent last January when it sold its 850,000 square foot Queen Street Toronto flagship (and adjacent office tower) to Cadillac Fairview for $650 million. Cadillac Fairview, in turn, merged Hudson’s Bay with the Toronto Eaton Centre, creating Canada’s second-largest mall. Saks Fifth Avenue will occupy 150,000 square feet within the Hudson’s Bay building as a result, and similar deals could happen in other Canadian cities. We’ll discuss several of these, below.
Vancouver: Sources say that Downtown Vancouver’s Hudson’s Bay is a contender for a similar sale. The massive 637,000 square foot store, spanning eight floors, is already connected to neighbouring Pacific Centre via an underground passage. Pacific Centre’s landlord, Cadillac Fairview, could be open to a deal since it’s the same landlord that spearheaded the purchase of Hudson’s Bay’s Toronto store. Saks Fifth Avenue could occupy up to 150,000 of Downtown Vancouver’s Hudson’s Bay, though details of Vancouver’s Saks store have yet to be bee finalized. Rumour has it that Saks could also open in a suburban Vancouver mall, as well, and we’ll update you when we learn more.
Calgary: Downtown Calgary’s 450,000 square foot Hudson’s Bay flagship is attached to the Scotia Centre. Selling this store could provide HBC with necessary funds for a store renovation, not to mention the addition of Saks Fifth Avenue within the same building. Downtown Calgary already has one large luxury retailer, a 147,000 square foot Holt Renfrew store, located two blocks west. Sources can’t confirm if Saks will open in Calgary though if it does, we’d expect either a Downtown location within Hudson’s Bay, or a free-standing store at Chinook Centre.
Ottawa: Hudson’s Bay’s 335,000 square foot Ottawa store is located across the street from Cadillac Fairview-owned Rideau Centre. Similar to what it did in Toronto, Cadillac Fairview could purchase Hudson’s Bay and join it to the Rideau Centre. Although analysts suspect that Saks won’t open in the city, an Ottawa store could be a strategic move for Saks. Ottawa is affluent and growing, and we’re not aware of any expansion or relocation plans for its tiny Holt Renfrew store. A Rideau Centre Saks could see synergies with the mall’s new 157,000 square foot Nordstrom store, its new La Maison Simons store, and its new flagship Harry Rosen menswear store, all opening within the next two years.
Montreal: Montreal’s 655,000 square foot Hudson’s Bay flagship is connected underground to Oxford Properties-managed Promenades Cathedrale. HBC indicates that Saks will open at least one store in Montreal. Selling this store could raise much needed funds for its renovation, not to mention spearheading a large Saks shop-in-store.
Winnipeg: Hudson’s Bay’s massive Downtown Winnipeg flagship is another story entirely. The 656,000 square foot building is heritage protected, rendering it essentially a white elephant. The store underperforms, with less than 240,000 square feet currently in use. Sources say that the store is a liability and that HBC wants to offload it, with recent attempts to transfer ownership of the building to the Manitoba government in exchange for tax benefits.
Unlocking the value in HBC’s Canadian real estate could vastly improve company cash coffers. Its most valuable real estate asset, however, isn’t one of its Canadian stores. HBC owns Saks Fifth Avenue’s 646,000 square foot Manhattan flagship, valued at about $1 billion. Richard Baker reportedly refers to it as the company’s ‘crown jewel’. We think it and other HBC properties will eventually be sold either via a REIT, or individually.
I can’t think of any major retailer that does not own it’s top performing stores. This idea, if it were to happen, is truly one of the dumbest things a retailer could do.
Richard Baker is just doing whatever he can to keeps his house if cards from falling
They already sold downtown Victoria store and turned it into condos I’m surprised that wasn’t mentioned
You’re correct, Sally – HBC has sold several Canadian stores for redevelopment, including its Downtown Victoria, Edmonton, Saskatoon and Regina locations. We were addressing HBC’s current stores in this article.
The downtown Winnipeg Bay store has huge historic importance as it was the original headquarters for the company and its first flagship store.
In addition to offering to give the building to local government, HBC also offered to give the space to the Winnipeg Art Gallery next door for an Aboriginal Art Gallery. Instead, they are undertaking new construction.
The University of Winnipeg was reportedly offered the Portage Ave building for $1, declining to instead focus their funding on renovating an old bus depot on the opposite corner.
There was also a serious bid to have the site used as the new headquarters for Manitoba Hydro. The successful bid is a few blocks east on Portage.
The building visibly looks run down in the areas you can still access with the flooring worn out in many places. Carpet seams with duct tape holding them down is not uncommon. The building has basically be left to rot. The lack of significant retail in Winnipeg’s downtown has also led to a lack of customers which started a cycle meaning the store is stocked less which then spirals back to fewer customers.
The large floor plate mean as is there is lots of interior space with the desirable windows being relatively scare. The lack of modern wiring makes an office/classroom conversion cost prohibitive as does the extensive additional plumbing needed for a residential conversion. The condo market in downtown Winnipeg remains fairly young with several large projects already announced.
While the Eatons store a few blocks east on Portage Ave was demolished to make way for MTS Centre there is not the same quick fix for HBC.
Such a shame for such a beautiful, historical building. Hopefully it will get the attention it deserves, and properly be restored and re-purposed.
Unrelated to this article..
Rumours are running rampant that Le Chateau is about to file for bankruptcy. Insiders at the company are running for the doors.
RI – Please investigate this as there has been no official word from management.
The stock was down again today -8% to a new low.
We’ll look into it – thank you for the tip! – Craig
It seems that the author doesn’t know that the Montréal La Baie d’Hudson is directly connected underground to the Promenades de la Cathédrale mall.
You’re correct – we weren’t aware of that! We’ll correct the article accordingly. We apologize for the oversight.