For lease: Target retail space near you
Published Thursday, January 15, 2015 12:48PM EST
Last Updated Thursday, January 15, 2015 5:42PM EST
Canadian shoppers better get used to seeing “space for lease” signs at their nearest shopping mall, as Target’s departure from Canada will leave behind 133 big, empty retail spots across the country.
The fate of those empty spaces will become an important sidebar to the Target story going forward, as not all of them sit in prime retail locations.
Target took over many spaces once used by Zellers when it arrived in Canada in 2013. The discount retailer established an aggressive footprint immediately, opening 124 stores in its first year and adding nine more in 2014. Four of those stores were new builds made specifically for Target, and the company continued to open new stores as recently as last October.
All 133 of those stores will soon go dark – at least temporarily – until those spaces can be refitted for another big retailer, or divided up into smaller spaces.
“Target moved in too quick and too large,” said marketing professor Mandeep Malik of McMaster University. Malik says Target’s aggressive approach in Canada was due in part to the demise of Zellers, which freed up a great deal of real estate for Target to seize at a discount.
“They were getting a good deal,” Malik said.
But two years after it cannibalized Zellers’ space, Target will be the one putting out the ‘For Lease’ signs.
Retail adviser Maureen Atkinson says the soon-to-be-empty Target real estate spaces will probably be divided up on a “case-by-case basis,” with the better spots likely to be snatched up in short order.
“The best locations will be re-used and there will be tenants for it,” said Atkinson, a senior partner at J.C. Williams Group Global Retail Advisors. She adds that Target competitor Wal-Mart will probably be “in line” to fill some of the Target spaces. However, stores in secondary areas and smaller centre will likely have a tougher time attracting new tenants, Atkinson said.
In the meantime it’ll be business as usual for most malls housing Target locations. Target still needs to liquidate its stock, and it can’t just escape from its lease agreements. The liquidation phase is expected to last 16-20 weeks, with mark-downs beginning in early February.
Target’s CFO says the company has officially cut ties with Target Canada, and all real estate leases are now the property of Target Canada’s estate. That means Target Canada will take those leases into the legal proceedings that ahead, and they will be dealt with by an assigned creditor under the Companies' Creditors Arrangement Act.
The general manager of Brampton, Ont.’s largest shopping mall said on Thursday that he learned the Target news along with everyone else, and he will be watching with great interest going forward.
“For the time being, it is business as usual at our centre,” said Andrew Butler, general manager of Bramalea City Centre. Butler says the two-storey Target store at Bramalea occupies about 14,000 square feet of retail space.
But as the Target fire sale begins, it won’t be long before its 133 locations become empty shells of what they were.