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.

The Hudson’s Bay store in Coquitlam  Centre was shuttered on the weekend, because the company did not pay their rent.

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

 

 

 

 

 

Comments

  1. This was inevitable that the US owner would cream off the real estate and without it the store would eventually go under.
    It’s true that they did refresh the retail operation. But now employees, many of whom have worked for HBC for a lifetime, will get the short end of the stick.
    This should be a lesson to the competition bureau, to not allow owners without a stake in the communities or employees to take over iconic companies, or at least be required to create independent, financed pension plans.

  2. I think the sale of the Vancouver store fell through and it’s either still for sale or they are/were looking at a JV with a developer (Rio-Can?).

    Meanwhile, I think they did manage to sell the Montreal store on Ste. Catherine St. this year (and lease back only a few floors).

    Generally, it’s running the course of the former Bon Marche/Macy’s in downtown Seattle which was pared down with upper floors leased to Amazon, then eventually closed this year. Selling and leasing back real estate has been a sign of economic losses for department stores (it also eliminates an asset to borrow against). Not sure, but Woodward’s and Eaton’s may have done the same.

  3. Last month, some time after the sale of the Downtown Vancouver store fell through, HBC created HBCPI, Hudson’s Bay Properties and Investment, to “manage, maximize and enhance” the 40 million square feet of leasable space the company owns across North America. They already sold the Lord and Taylor building last year, and a number of European assets. HBC has acquired a New York based development company called Streeworks Development, specializing in large scale mixed use developments.

  4. “In many ways we are watching a twisty, slow, sad end to a company which has a long association in the history of Canada.”

    There was nothing more representative of the working to upper middle class Canadian society that The Bay, Sears, Eatons and Woodwards in the 1970’s. Middle class clientele, employees who were part of the middle class. Everything from groceries to outboard motors, and the go to places for clothing. Today companies make products for Amazon, Walmart and Costco, or for a specialty retailer. What a sad world we live in.

    1. The neighbour in my condo tower is constantly getting Amazon boxes – at least 1 daily. Each of these deliveries is in a separate cardboard box (though the boxes of diapers seem to be in their original boxes) and would have been delivered by an Amazon van (though they do combine deliveries like a mail truck).

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