Malls have big spaces to fill following Sears store closures

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Sears store in Sault Ste. Marie closed its doors Oct 1. The parking lot now sits empty as does the main anchor for the Station Mall

Sault Ste. Marie was one of the first stores to close under the bankruptcy that was announced by Sears Canada earlier this year. The closure has forced the mall owner, Algoma Central Reality to suspend the sale of the Station Mall, which has been on the market for over a year.

The huge footprint that Sears occupied at the waterfront mall for over 40 years will be hard to fill. It’s a situation many smaller cities are facing as Sears Canada announced last week that all of its stores across Canada will now close.

At Heritage Place Mall in Owen Sound, Ont., an empty Sears department store would leave a mammoth void. The insolvent retailer is one of the mall’s largest occupants. More than 60 people work in the anchor tenant’s roughly 6,500 square metres, a space big enough to fit 14 basketball courts.

If the court approves Sears Canada’s bid to liquidate its roughly 130 remaining stores, the decision will send shoppers, employees and mall owners in Owen Sound and dozens of other smaller Canadian cities scrambling to find alternative shopping destinations, jobs and tenants.

“My first reaction was: Oh, crap,” said Owen Sound Mayor Ian Boddy of hearing the nearly 30-year-old location, is likely to close soon.

“We’re pretty disappointed.”

A closure will hurt the local economy, he said, leaving dozens unemployed and perhaps prompting fewer people to travel to the region to shop.

Some 4,000 kilometres away on the West Coast, the mayor of Prince George, B.C., echoed those concerns about the Sears store at its Pine Centre Mall.

“It will have a direct economic impact on our community,” said Lyn Hall.

The store employs more than 60 people, he said, and sells goods and services to hundreds of thousands living in Prince George and the surrounding areas.

Both leaders wondered how their local malls would cope with an anchor tenant’s departure.

The bulk of the former juggernaut’s stores are in shopping centres in communities like Owen Sound and Prince George — smaller Canadian cities, where the store may serve a larger geographic area than just those living within the city’s borders.

Of Sears’s remaining 74 department stores, all but one are in shopping malls, most in areas with populations under 400,000 and some well under that.

The malls in these so-called secondary or tertiary markets are likely to struggle to fill the vacant space in the event Sears doesn’t sell its leases or real estate to a third party, said Peter D. Morris, the founder of Greenstead Consulting Group, a real-estate consultancy firm.

“I fear some of those smaller properties may not be able to come back at all,” he said, declining to speculate which of the malls may go under.

There isn’t another big department store chain that requires that much space waiting on the sidelines, he said.

The remaining department store mall locations total more than 10.6 million square feet (nearly one million square metres). That means the select few chains like The Hudson’s Bay Company or Simons that could take over some locations have a plethora of real estate to choose from, said Morris, and likely won’t gobble up anywhere close to all the vacant space.

For malls that don’t draw another single anchor tenant, he said, the easiest solution would be to divvy up the former department store space and woo intermediate-size shops, like athletic retailer Sport Chek or bookstore Indigo.

Another possibility, he said, is that certain restrictions in place due to Sears’s lease, like limiting further development, could disappear along with their corresponding leases and open landlords to a whole range of development possibilities. They could choose to build residential units or a mixed-use space that combines entertainment, recreation and shopping, said Morris.

However, that takes time. Consumers could find other venues with a greater selection to shop at in the interim, he said, and landlords will have to find a way to lure them back after the changes are made.

To make matters worse, for many of the malls, the Sears saga is a recurring problem. In recent history, they’ve grappled with the demise of Zellers and, more recently, Target.

Prince George’s Pine Centre Mall, for example, lost its Target location about two years after it opened when the American chain announced it would shutter all of its Canadian stores. A Lowe’s Canada has since opened in the location.

The Sears vacancy — at 10,400 square metres, or 24 basketball courts — will leave a much larger hole for management to fill.

Mayor Hall said he’s not sure what the mall will do, but it will be quite a challenge.

with files from Aleksandra Sagan, The Canadian Press

12 COMMENTS

  1. No wonder why online shopping has taken over. Where is the customer service anymore?

    Went to Sportchek with my wife to get shoes the other day and there was one person helping 5 groups of people all buying shoes. Nobody else was around. Get to the till and there is a lineup with 3 store people behind the desk. One till is open and the other two are chatting. A phone call comes in and the person working the till answers the phone and the other two leave to go who knows where. Why should I wait in a store and get zero service when I can go online and be done with it in 5 mins.

    • Much agreed, Joe. A border town does have it’s opportunities. Shop in the US and the service you get there is exceptional…they WANT you to come back. Here in Canada? Well, that’s another story…

  2. Instead of wasting time on The Amazon pipe dream, Shoemaker should try to get Big Steel Man to reopen in Station Mall…then he could shop locally for his ridiculous wardrobe

  3. Bring in a Giant Tiger for the down to earth shopper they sell a lot of Canadian goods would be good in Sault Ste Marie

    • If Giant Tiger had any interest in servicing The Hamlet, it would have done so by now…when it is really desperate to open in a 4th tier market, that is when it will happen. Negative growth in an aging population is not a place to grow your business

  4. What a great space to put the Casino in. As this one was a temporary Casino, wouldn’t it be achievable to move it to the mall are with more parking, easier access, etc. Just a thought.

  5. This is solely about market demand. Quite simply retailers will not bother coming to the Hamlet…there is not enough business to be had. Seniors walking the mall daily, drinking coffee do not support retail. Teens, working millenials do…something the Sault has neither of, in enough quantity to warrant a retailer coming here. Head to Sudbury, or Toronto, or Birch Run folks…there’s density there, retail traction, and enough business to exist. No reason to exist in the Sault. Dwindling population is reflected in the vacancies in downtown, Station Mall, Cambrian Mall and the west and east end malls…contraction is the word of the day, sadly.

  6. If the Station Mall owners hope to sell the mall in the foreseeable future, I believe they have to take some decisive action on the Sear’s space quickly. Whether it’s used as office space, or perhaps re-design it to handle smaller tenant spaces; they have to make a move quickly. We’ll just have to wait and see what develops. Empty commercial space, especially of this size, is never a good indicator of a city’s economic climate.

    • Actually, Frank, empty commercial space, especially of this size, is a perfect indicator of the Hamlet’s economic climate. Contraction, fade away…

  7. WHERE is the local perspective on this story?? I care more about our city than Owen Sound. WHAT IS THE LOCAL mall owner saying ?

  8. Indeed, and the problem with this is more gougers will have to move into them to be able to afford the ridiculous rent and overhead, and even if they did it wouldn’t last long so they would likely just not go there in the first place. The age of online shopping is taking over.

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