Morguard Real Estate Investment Trust is advancing a series of redevelopment projects across its Canadian shopping centre portfolio, bringing grocery stores, entertainment concepts and expanding national retailers into spaces formerly occupied by department stores and other large-format tenants.
The REIT reported improving retail occupancy and positive leasing momentum during the second quarter of 2026, with grocery-anchored community centres operating near capacity and enclosed malls continuing to post income growth despite the challenges created by Hudson’s Bay’s departure from several properties.
At St. Laurent Centre in Ottawa, a multi-year remerchandising program has already contributed to approximately 10 per cent increases in both foot traffic and sales productivity among smaller retailers, according to management. Additional projects are underway at malls in Saskatoon, Red Deer and Cambridge, Ontario, involving retailers and concepts including Uniqlo, Sport Chek, No Frills, Splitsville and Activate.
“We continue to believe that there are strong fundamentals in the retail leasing environment,” Andrew Tamlin, chief financial officer of Morguard REIT, said during the company’s second-quarter conference call.
The projects illustrate how Canadian shopping centre owners are moving beyond the traditional department store model, replacing large single-purpose anchors with a broader mix of fashion, grocery, sporting goods and entertainment operators designed to generate more frequent visits throughout the week.
Retail Occupancy Continues to Improve
Retail occupancy reached approximately 89.7 per cent at the end of June, up from 88 per cent at the close of 2025 and 60 basis points higher than the previous quarter.
Morguard reported occupancy of approximately 95 per cent across its community shopping centres and 87.8 per cent across its enclosed regional malls.
The REIT owns interests in 18 retail properties comprising approximately 4.3 million square feet. Its broader commercial portfolio, which also includes office and industrial assets, totals roughly eight million square feet across six provinces.
Community shopping centres generated same-asset net operating income growth of 5.9 per cent during the quarter, while enclosed regional malls recorded growth of 2.5 per cent.
Management described the community centre portfolio as effectively full, reflecting the stability of grocery stores, financial institutions and other daily-needs retailers that continue to generate consistent customer traffic.
The enclosed mall portfolio has required more active redevelopment, particularly where former department stores created significant vacancies. Even so, Morguard reported solid tenant sales, healthy traffic levels and positive leasing spreads secured throughout 2025 that continued to support retail performance this year.
St. Laurent Centre Becomes the Portfolio’s Showcase Redevelopment
St. Laurent Centre has emerged as Morguard’s flagship example of how strategic tenant remerchandising can strengthen an established regional shopping centre.
The Ottawa property is undergoing a multi-year transformation designed to introduce prominent national and international retailers while redeveloping former Sears and Hudson’s Bay space.
The first phase, completed in late 2025, created new or expanded premises for H&M, Sephora and La Vie en Rose through an investment of approximately $5.4 million.
Management said those additions have already produced measurable benefits. Foot traffic has increased by approximately 10 per cent, while sales productivity among smaller retailers has also risen by roughly 10 per cent, according to John Ginis, vice-president of retail asset management.
“Productivity of the shopping centre is up because foot traffic is up,” Ginis said. He added that sales among the mall’s smaller tenants had increased by a similar amount.
The next phase centres on approximately 84,000 square feet of former Sears space. Morguard has allocated approximately $23.3 million toward that redevelopment, including demolition of an obsolete parking structure connected to the former department store. The broader St. Laurent program is expected to involve between $25 million and $30 million in investment.
A 12,600-square-foot Uniqlo store is expected to open in early 2027. Sport Chek will relocate into a new-format store within the redeveloped area, while Splitsville will introduce a new entertainment destination. The larger redevelopment is expected to continue into 2028.
Rather than replacing one traditional anchor with another, the project assembles several complementary uses that can attract customers for different reasons and at different times of the week.
Hudson’s Bay Leaves Different Challenges at Different Properties
Hudson’s Bay previously occupied approximately 290,000 square feet across St. Laurent Centre and Cambridge Centre, generating roughly $1.5 million in annualized gross rent for Morguard REIT before the leases were terminated through the retailer’s creditor-protection proceedings.
The Cambridge Centre lease was disclaimed in June 2025. The St. Laurent lease remained part of Hudson’s Bay’s lease monetization process for several additional months and was included among the locations proposed for transfer to a new department store venture led by B.C. businesswoman Ruby Liu. The court rejected that transaction in October 2025, and the St. Laurent lease was disclaimed the following month.
The closures immediately affected occupancy and rental income, but they also created opportunities to rethink how large department store boxes function within modern shopping centres.
Urban Behaviour Provides an Interim Solution at St. Laurent
One of Morguard’s earliest responses was relocating Urban Behaviour into part of the former Hudson’s Bay premises at St. Laurent Centre. The retailer opened in the lower level of the former department store in May 2026, allowing Morguard to reactivate part of the space while broader redevelopment plans continue.
Management said Urban Behaviour has been performing exceptionally well at the property.
The move demonstrates how landlords can use existing successful tenants to restore activity while planning longer-term redevelopment requiring larger capital investments.
Grocery Continues Expanding Into Canadian Malls
Morguard is also strengthening its enclosed malls by introducing grocery anchors.
A No Frills opened at Parkland Mall in Red Deer during late 2025 following a redevelopment costing approximately $1.6 million. The project transformed previously vacant space into more than 22,000 square feet of income-producing retail.
Another No Frills is under construction at The Centre in Saskatoon within former Target space. The approximately 30,000-square-foot store is expected to open during the second quarter of 2027 following an investment of approximately $4.7 million.
Management expects both stores to become significant traffic generators.
The projects reflect a broader trend across Canadian shopping centres, where grocery retailers are increasingly replacing large-format vacancies and creating dependable weekly visitation that benefits neighbouring merchants.
Entertainment Continues Expanding Within Regional Shopping Centres
Entertainment has become another important component of Morguard’s redevelopment strategy.
Alongside Splitsville at St. Laurent Centre, the REIT is converting approximately 11,000 square feet of former cinema space at The Centre in Saskatoon for Activate. The project is expected to cost approximately $2.2 million and be completed during the second quarter of 2027.
Entertainment operators can often occupy spaces that are difficult to divide among conventional retailers while extending customer visits into evenings and weekends, supporting restaurants and other nearby businesses.
Cambridge Centre Remains a Work in Progress
Redevelopment of the former Hudson’s Bay premises at Cambridge Centre remains under negotiation. Management said it is working toward a transaction involving at least the lower level of the former department store, although no binding agreement had been finalized at the time of the conference call.
The REIT has removed approximately 65,700 square feet from its active leasable area while redevelopment options are evaluated. As a result, improvements in reported occupancy should not be interpreted as a complete replacement of the former Hudson’s Bay space.
The contrast between Cambridge Centre and St. Laurent demonstrates that no single formula exists for redeveloping former department store properties. Layout, access, construction requirements and local market demand all influence the eventual solution.
Canadian Shopping Centres Continue to Evolve
Morguard’s redevelopment program reflects broader changes taking place across Canada’s shopping centre industry. Rather than relying on a single department store to anchor an entire property, landlords are increasingly assembling a mix of grocery, fashion, sporting goods, beauty and entertainment tenants that create multiple reasons for customers to visit.
At St. Laurent, that strategy now includes Uniqlo, Sport Chek, Splitsville, H&M, Sephora and Urban Behaviour. In Red Deer and Saskatoon, No Frills is introducing regular grocery traffic, while Activate adds another destination beyond traditional retail shopping.
The early results at St. Laurent suggest the approach is gaining traction. Higher foot traffic and stronger sales among smaller retailers indicate that investment in anchor spaces can strengthen performance across an entire shopping centre.
Morguard expects retail performance to remain stable through the balance of 2026 as redevelopment projects continue.
While work remains to replace former Hudson’s Bay space at several properties, the REIT’s recent leasing activity suggests well-located Canadian shopping centres continue to attract investment from retailers prepared to expand their physical presence.
As department stores continue to disappear from the retail landscape, Morguard’s strategy points toward a different model for Canada’s regional malls — one built around a diverse mix of destinations rather than a single dominant anchor.
