Saks Fifth Avenue will open its Canadian flagship store within Hudson's Bay's 851,000 square foot store at 176 Yonge Street (at Queen Street) in Toronto. The 150,000 square foot Saks store will span several levels. It is expected to open late 2015, about a year before the scheduled opening of Nordstrom a couple of blocks north at the Toronto Eaton Centre.
As part of the Saks deal, Hudson's Bay sold its Queen Street flagship (as well as an adjacent office tower) to landlord Cadillac Fairview for about $650 million. Cadillac Fairview operates the adjacent Toronto Eaton Centre. Hudson's Bay will lease back its store for the next 25 years with the option to extend the lease by nearly 50 years thereafter. Hudson's Bay and Saks (as well as the concessions contained within) will be integrated into Cadillac Fairview's Toronto Eaton Centre marketing, as they will be considered part of the mall.
Money used from the proceeds of the sale of the Hudson's Bay flagship will go towards debt payments as well as to further expand Saks into Canada.
The announcement of Saks at Yonge and Queen is surprising since we had expected that Saks' Canadian flagship would replace Hudson's Bay at Toronto's Yonge and Bloor intersection. In excess of 300,000 square feet, it would have been the world's second-largest Saks store. Cadillac Fairview reportedly convinced Bay CEO Richard Baker to abandon plans to build the Yonge & Bloor Saks flagship in favour of a Queen Street Saks. We've been told that plans for the Yonge and Bloor Bay store have been scrapped for now, and that the entire Bay store could be shuttered and subdivided as part of a redevelopment.
Hudson's Bay also recently introduced a 19,000 square foot TopShop/TopMan concession into its Queen Street store, and New York City-based Kleinfeld Bridal will open a 20,000 square foot seventh-floor location in May. Cadillac Fairview has stated that both of these will be featured prominently in Toronto Eaton Centre marketing as well.
Earlier this month, Nordstrom announced that it will occupy 213,000 square feet of Sears' Toronto Eaton Centre space. With Nordstrom anchoring the northern side of the Toronto Eaton Centre and a combined Saks/Hudson's Bay to the south, the Toronto Eaton Centre will see its image elevated substantially in a relatively short period of time. La Maison Simons could also move into some of the space vacated by Sears.
Inserting the 150,000 square foot Saks store into the Queen Street Hudson's Bay will be a challenge. A considerable portion of the Bay store has already been renovated, including portions of the store that we expect to be utilized for Saks. We suspect that Saks will be located at the eastern end of the flagship Hudson's Bay store. Recently completed renovations for a second-floor men's store may therefore have to be demolished. In addition, the future of Hudson's Bay's women's luxury department 'The Room' is in question, as it occupies over 20,000 square feet of the eastern end of the store's third floor.
Another challenge for Saks and Hudson's Bay is that a significant amount of space on the store's ground floor was recently dedicated to one of the world's largest women's shoe departments. Inserting the 150,000 square foot Saks store will require prime ground-floor retail space. Time will tell what will become of the Queen Street Bay and its recent renovations.
Richard Baker says that 'food halls' will be introduced into both its flagship Toronto Eaton Centre store as well as its Sherway Gardens store. These could be similar to food halls in European department stores such as Harrod's in London, Le Bon Marché in Paris or Ka De We in Berlin. We'll update you on this and other Saks-related details as they arise.
Source: Cadillac Fairview press release