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has sold five more of its store leases to mall landlords for about $400 million. This creates an opportunity to redevelop these spaces as well as possibly pave the way for more Canadian
Sears has sold its store leases back to its mall landlords in the following locations:
- Toronto:The Toronto Eaton Centre
- Toronto:Sherway Gardens Shopping Centre
- Markham, Ontario:Markville Shopping Centre
- London, Ontario:Masonville Place
- Richmond, BC:Richmond Centre
All of these malls are owned and operated by landlord
except for Richmond Centre, which is co-owned by Cadillac Fairview and
The following is our analysis of what could replace these Sears Canada locations:
Toronto Eaton Centre
The 816,000 square foot crown jewel of Sears Canada's real estate offers plenty of options for redevelopment. We think that
that it would occupy 225,000-275,000 square feet.
Other possible department store anchors include
(which would occupy about 100,000-130,000 square feet) and Bloomingdale's,
in the Canadian market. Saks Fifth Avenue is a further possibility, though we believe Downtown Toronto's Saks
, closer to the luxury shopping area of
and its anchor,
Some of Sears' current Toronto Eaton Centre space could also be subdivided for use by multiple retailers. We'll elaborate soon in an article devoted specifically to Sears' Toronto Eaton Centre real estate.
The top four floors of the store will remain Sears Canada's corporate headquarters, at least in the shorter term. Sources tell us that Sears Canada will continue to utilize its $1/square foot/year lease for this office space (which would have expired in the year 2077), making it far less costly than other available office space.
Sears will be vacating the lower retail portion of this location by February 28th, 2014.
Sherway Gardens Shopping Centre
There are plenty of options to reuse the 225,665 square foot Sherway Sears space. The store could even be demolished for redevelopment, to be replaced by multiple smaller stores and one or more anchor stores. Sherway attracts affluent shoppers and the mall could see
occupy part of the current Sears space, though Saks would likely not occupy more than about 130,000 square feet.
Sherway Gardens is one of Canada's most productive malls, enjoying per-square-foot sales of almost $900/year according to its landlord. Hudson's Bay anchors the opposite end of the mall from Sears. Other anchors include
) and, in 2016,
Sears will be vacating its Sherway location by February 28th, 2014.
Markville Shopping Centre
Markville's Sears store is 130,626 square feet according to its landlord, and we think the store space has limited potential for an upscale replacement anchor store. The mall already features Hudson's Bay and Walmart as its anchors, and the entire mall spans close to a million square feet. Sales per square foot at Markville are only about $490/square foot/year according to the mall's landlord.
La Maison Simons could replace part of Sears' space. The space could also be subdivided for multiple smaller anchors and other stores. We doubt that, given the mall's demographics and sales, Nordstrom, Bloomingdale's or Saks Fifth Avenue will replace Markville's Sears any time soon.
Sears will be vacating Markville by February, 2015.
This 127,205 square foot Sears store is in London, Ontario's most productive shopping centre. The mall, in fact, boasts sales of about $770/square foot according to its landlord. Other anchors include a relatively small Hudson's Bay store (at about 85,000 square feet) as well as a 91,200 square foot Target store.
One could speculate that Sears' space could be replaced by Nordstrom, as the city and store arguably share some of the same characteristics. London is a conservative but relatively well-to-do city whose population could possibly support a Nordstrom. Nordstrom, itself, has been described as being both conservative and upscale. We doubt London would have the quantity of luxury-oriented shoppers to support Saks Fifth Avenue, and we don't expect La Maison Simons to target London in the next several years.
Sears will be vacating this space by February 28th, 2014.
This 122,000 square foot Sears store could be reconfigured into multiple-tenant retail or be occupied by the likes of Nordstrom or La Maison Simons. Richmond has considerable household wealth, despite income statistics that might indicate otherwise. The mall enjoys sales of about $700/square foot, but may require renovations to entice any new upscale anchors.
Sears will be vacating this space by February, 2015.
Further Details on Sears Leases
In the past 14 months, Sears Canada has sold off several of its leases to mall landlords. In the summer of 2012, Sears sold its leases in Vancouver, Calgary and Ottawa,
. Sears subsequently
, resulting in
. Sears also announced
Sears is making a large profit from selling its leases. Its
in the summer of 2012 generated about $170 million. The
gained the company over $190 million, and a
for Sears' Scarborough Town Centre lease could further be realized. This is easy money for Sears, and it leads us to anticipate that more Sears Canada leases will be sold in the coming months.