Three years ago I wrote about the turf of the iconic Hudson’s Bay store in downtown Vancouver at Granville and Georgia Streets being for sale, and in 2018 I wrote that the store’s property had been bought by an undisclosed Asian buyer for 675 million dollars.
The Hudson’s Bay Company had previously leased their New York City store location to WeWork, a shared workspace business, setting the stage for a suggested change in the ownership (and purpose) for the Vancouver store. This arguably is on one of the most important heritage sites in the city, a block away from the Vancouver Art Gallery, and right beside the Canada Line.
What a shift a Covid pandemic year makes, where trends that would have taken longer to come to fruition have had a chance for accelerated growth, with less angst expressed by the public. It was expected that Hudson’s Bay was to sign a 20-year lease with the new owner, and have WeWork, the shared office space operator, leasing the top floors of the Vancouver and other Hudson’s Bay stores. That was pre-Covid.
Department store retail and the demand for downtown shared work facilities has shrivelled during the pandemic. Sadly even though Hudson’s Bay Company has been in Vancouver since 1887, first operating out of a storefront on Pender Street, their way of leaving has not been so glamourous.
As reported by Rachelle Younglai and Susan Krashinsky in the Globe and Mail HBC have not paying their bills, and they are being a bit obstreperous about it.
Hudson’s Bay Company (HBC) who also own Saks Fifth Avenue and Saks Off Fifth department store chains, is “facing legal actions for unpaid rent in at least 20 locations in Ontario, British Columbia and Quebec, as well as in Florida, according to court documents.”
It appears that rent has not been covered by HBC for many Hudson’s Bay stores across Canada, with Morguard REIT alone out $2.79-million in unpaid rent for five locations in shopping centres in Ottawa, Toronto, Brampton, Ont., and Abbotsford, B.C. And there’s more outstanding debt on leased space too.
HBC had privatized pre pandemic, and there had been accusations of the chain not running “first-class” operations, especially at Yorkdale Mall in Toronto which is the flagship store and a top producing mall.
In the “best defence is a good offence” strategy, HBC has responded legally by saying the same thing about the landlords that own the various properties that the stores are positioned on.
It is unusual for a tenant to sue a landlord, but perhaps HBC has more sway for its historic and well loved placement in consumer communities and confidence across Canada. That’s why the landlords have not squashed HBC’s lack of payment and bold rebuttal flatter than a picnic table ant.
“HBC believes the burden posed by the pandemic should be shared fairly by both landlords and retailers,” Ian Putnam, HBC Properties and Investments’ president and chief executive officer, said in a statement. Where the company is not able to come to an agreement with landlords, he added, HBC is “happy to have the courts determine what is fair and reasonable.”
Of course there is also no demand for large plate commercial floorspace right now either, so HBC is in many ways the only player, paying or not. The closing of Sears Canada and Target stores in the last five years showed there was no one rushing in to take over that vast floor space void.
But the Hudson’s Bay Company, established as a corporation in 1670 with such an historical and trusted name in Canada acted oddly with Toronto employees too in this YouTube video below. They asked over ninety employees to accept a 25 percent pay cut and when they accepted, laid them off the next day with the severance based on the just agreed to salary reduction.
In many ways we are watching a twisty, slow, sad end to a company which has a long association in the history of Canada.
Image: City of Vancouver