The closure of Target stores in Canada will create new shopping opportunities and perhaps “more creative” alternatives to big box stores, according to real-estate experts.
James Shandro, vice president of retail, leasing, and sales at the Vancouver office of the commercial real estate services firm Avison Young, noted that consumer demand remains strong.
“We have some very sophisticated and savvy landlords and developers in this country who have experienced loss of anchor tenants off and on many times over their histories of mall ownership,” Shandro told the Straight in a phone interview following an announcement today (January 15) by Minneapolis-based Target Corporation to cease operations in the country.
“So while Target is a big name to be losing based on their place in the world landscape, I think ultimately, this will just create opportunities for other anchor tenants and maybe even some new, more creative solutions to take care of some of the big box spaces that will be coming back when Target leaves,” Shandro continued.
Target’s announcement came less than two years after the American retailer launched operations in Canada.
There are 133 Target stores across the country, employing about 17,600 people.
“Target Corporation’s cash costs to discontinue Canadian operations are expected to be $500 million to $600 million, most of which will occur in the Company’s 2015 fiscal year or later,” the retailer stated in a media release.
The company also announced that it filed an application before the Ontario Superior Court of Justice in Toronto for protection under the Companies’ Creditors Arrangement Act. According to a CBC report, the request was granted by the court.
Target has 19 stores in B.C., including one at Metrotown in Burnaby.
The American retailer previously acquired leases held by the Zellers chain to gain a foothold in the Canadian market.
Avison Young’s Shandro doesn’t think that there is an excess of retail spaces in Metro Vancouver and across the province.
“There’s still plenty more consumer demand for more retail,” Shandro said. “It’s just a matter of having the right mix of retailers that that demand is yearning for.”
Shandro anticipates that the spaces to be vacated by Target will host both big and small retailers.
“There is still lot of interest and demand from other American and other international retailers that, irrespective of Target’s decision, have great interest in entering the Canadian marketplace,” he said. “This will just now give them other opportunities to consider as far as where they want to locate. But I’m sure in other markets, some of these big spaces that Target will be vacating will be demised and carved up to accommodate multiple tenants, again depending on exactly what market you’re in.”
The Avison Young executive doesn’t see Target simply walking away from its leases.
“There are definitely going to be financial considerations and implications that Target will have to deal with, which will then of course give these landlords and developers time to sort out what their plans are going to be for these spaces,” Shandro said.
Real-estate consultant Peter Austin was following news about Target’s announcement when reached for comment at his Vancouver office.
“I would anticipate that if there isn’t another major chain coming from the States that wants to take over, the spaces will likely get split up,” Austin told the Straight by phone.
Austin doesn’t see the closure of Target stores giving pause to the development of new shopping spaces.
“People are still building shopping centres and expanding because the population is increasing, and and as population increases, in theory, you’ll need more square footage,” he said.
As for Target’s experience in Canada, Austin said that “it’s just a chain that has not done very well”.
“Obviously, their sales will now be divided up by other people,” Austin said. “That’s a positive for the other stores.”