Seaway Mall Target photo via Welland Tribune
When Target pulled out of Canada early this year, commercial real estate landlord’s across Canada were left with major retail vacancies. In Niagara, this translated to vacancies at St. Catharine’s Pen Centre, Welland’s Seaway Mall and Niagara Falls’, Morrison commercial park. Last week it was announced that Walmart would be leasing the vacant space at the Pen Centre, at this time there has not been an announcement for the other two spots. Landlords must look at repositioning strategies for the vacant spaces in Niagara Falls and Welland.
Large Canadian retailers to take over leases
When Target entered Canada it strategically leased and refurbished 220 Zeller’s locations. The vacant properties boasted below market rental rates and were located in prime locations. With Target’s departure, commercial real estate landlords now had the opportunity to make more money from their spaces through increasing the rental rates before the leases went to auction on April 28th. Major retailers within Canada including Walmart, Canadian Tire and Lowe’s snatched up a number of leases, companies including Sobeys, Metro and Hudson’s Bay have also been making noise. To date, Wal-Mart has purchased 13 leases, Canadian Tire has purchased 12 and Lowe’s, 13.
Redevelopment of the vacant Target stores
Target’s departure left large retails holes across Niagara, but each of the vacant retail spaces are within successful commercial parks and malls, which mean that redevelopment possibilities are strong.
The former Zellers and Target location in the Pen Centre is the first to confirm a new leaser in Wal-Mart. Wal-Mart’s total lease purchase across Canada amounted to $165 million and it was announced that they will spend a further $185 million in development and re-positioning. With the addition of Wal-Mart to the Pen Centre, St. Catharines will now have four stores throughout St. Catharines, two are located in the cities largest malls.
Morrison’s commercial park has experienced a resurgence over the past few years, due in part to Target’s refurbishment of the vacant Wal-Mart within the park. Growth of the park has included a new residential development and a new commercial park across the street, on the site of the former Optimist Park. It is unlikely that Lowe’s will pick up the lease for the vacant space as they have recently invested in commercial space on McLeod road. Look for this property to get picked up soon due to the strong economic vitality of the park and its ease of access to the highway.
You can expect that Welland’s Target will not see a tenant in Wal-Mart or a Canadian Tire, as both retail chains have relocated away from the Seaway Mall area over the past decade. The 130,000 sq. ft. space is the malls premier anchor space, with Sears and Winners already in place as tennants in the mall, there is potential to attract another large scale retail store. As recently as last summer, it was announced the vacant Canadian Tire store across the street had been purchased for redevelopment, proving that the Niagara St. retail landscape is still very desireable.
Investment confidence remains strong for retail in Niagara
Target and more recently Future Shops, departures from Niagara hasn’t deterred investor confidence in the area, at the beginning of May it was announced that Saks Fifth Avenue would open a store at the Outlet Collection Niagara. The retail space, set to open in May 2016, will be built to 23,000 sq. ft. specs. The decision to open the store in Niagara was based on the location and the strategic advantage of being along the QEW.
Some are calling the closures of both Target and Future Shop a “sea of change” in the retail real estate market. To learn more about commercial property redevelopment and re-positioning, connect with me.