A year after HBC’s collapse, some reimagined spaces — and a lot of vacant stores

Four days before Christmas, shoppers lined up around the Bay Centre in Victoria, B.C., where a corner of the mall had been transformed into a scene reminiscent of a London high street.

In the windows, animatronic bears and groundhogs in aprons and chef’s hats toddled around. Inside, Santa rode in a hot-air balloon hanging from the ceiling while an old-timey train display offered a rainbow of sweets and other delicacies and shoppers perused toys under a canopy of foliage.

“We put great effort into creating the magic,” recalled Ryan Townsend, whose new department store Sabayons was responsible for the holiday whimsy.

The business has been breathing new life into a property that just a year ago was on the verge of being dark and empty.

Canada’s oldest company Hudson’s Bay filed for creditor protection on March 7, 2025, under the weight of $1.1 billion in debt. The move kick-started a complex legal process that’s still ongoing as the 355-year-old business winds down, and resulted in the closure of its 80 stores and 16 more under its sister Saks banners.

A year later, a Canadian Press analysis has found the vast majority — at least 73 former Hudson’s Bay or Saks stores — are still empty, though a few of those have tenants preparing to move in. Some of those sites were once among the country’s most prized shopping properties — along the stretch leading up to Toronto’s Eaton Centre, by the ByWard Market in Ottawa and in the hearts of downtown Vancouver, Montreal and Calgary.

Other properties have already sprung back to life because of newcomers like Sabayons or mall regulars taking advantage of HBC’s demise to spur their own growth.

The Canadian Press counted 14 former HBC and Saks properties taken over by YM Inc. brands Urban Behaviour and Urban Planet, three now home to Continental discount clothing stores and three hosting Designer Depots.

A Zellers reboot has moved into part of the ex-HBC space at Londonderry Mall in Edmonton and Goodwill has replaced Saks Off Fifth on the Queensway in Toronto. Furniture stores Nuevo and Accents@Home have each taken over one property in Quebec and Alberta, respectively.

The patchwork of tenants is a reminder that there isn’t a one-size-fits-all solution for these massive, complex spaces that have rarely hosted anything other than a department store since their inception.

With the traditional department store model waning as more people shop online and brands increasingly open their own stores to sell directly to consumers, landlords now have the unenviable task of luring in the few businesses still wanting mammoth properties or reimagining the properties completely.

That many of the properties are still vacant doesn’t indicate a lack of effort on the part of landlords, said Don Gregor, an executive vice-president at Aurora Retail Group.

“When I’m talking to people like Oxford, Cadillac Fairview, Primaris, for example, they’re still working on logistics, on how to use or break up the space,” he said. “I think they’re going to have some serious ideas by the end of the month … but it’s not going to be easy.”

The largest HBC and Saks locations are mostly stand-alone, downtown properties that take up full city blocks with square footages around 600,000, but even some of the smaller properties will be hard for a single tenant to fill. HBC and Saks were often anchor tenants at malls, meaning they got prime, multi-level real estate and low rent fees in exchange for drawing foot traffic.

A January report from real estate firm JLL said the average mall lease in Canada sits at roughly 3,700 square feet. On average, HBC used 152,000 square feet per store, or roughly 40 times the space of your average shop.

Exacerbating the search is the fact that anyone who has wanted a property of HBC’s size has had no shortage of options. The collapses of Sears, Target, Nordstrom and now Toys “R” Us in Canada have left many massive properties in prime shopping districts available even years after the retailers’ departures.

“The very last of the Target locations was probably just leased in the last year,” Gregor said, referencing the U.S. business that left Canada in 2015.

And many of them were in much better condition than HBC’s sites, which were sorely in need of repairs to roofs, elevators and escalators, washrooms and heating, ventilation and air conditioning systems, court documents have said.

Much of that work couldn’t start the moment HBC filed for creditor protection on the brink of March break because the company was still trying to find a Hail Mary solution that would keep six stores open and when it failed, its locations didn’t close until June. Even when they did shutter, they still had to be emptied of fixtures and furniture and HBC had to renounce their leases before landlords could let anyone else move in.

At some sites, those tasks were completed within a few months, but it took longer at many others because HBC hung onto dozens of its leases in hopes of selling them to recover some of the $1.1 billion it owed creditors.

Billionaire Ruby Liu bought three leases in B.C. malls she owns for $6 million in June, and YM scooped up five for $5.03 million in July, when Ivanhoe Realties Inc. bought back one of the leases its parent company owns for $20,000.

But perhaps the biggest delay came from HBC’s bid to sell Liu 25 other leases for $69.1 million. The deal announced in May left stores empty all summer while the retailer battled landlords arguing Liu was ill-prepared to deliver on her plan to open self-named department stores with entertaining and dining spaces in their malls. It wasn’t until October that a court blocked the sale, prompting HBC to start turning those properties back over to landlords in November.

Liu has yet to open stores in the ex-HBC and Saks properties at her three malls, despite once claiming she could have 20 operating within 180 days of buying leases. Spokespeople for Liu’s company Central Walk did not respond to requests for comment on whether she still plans to open her own chain of department stores.

Ryan Townsend, who also owns seed-purveyor-turned-boutique-grocer Market Garden, never doubted he’d make good on the ambitions he’d been harbouring for years before HBC collapsed and he opened Sabayons.

But by the time he pitched HBC about taking over the top floor for a gourmet food hall, the company was on the eve of filing for creditor protection.

Anxious not to let the opportunity pass him buy, Townsend bought truck trailers, shelving, lights and just about any fixtures he could get from HBC while trying to convince the Bay Centre to let him move in.

In late August, while he roamed Europe for merchandise, it became official: He had a lease for HBC’s ground floor.

Townsend got to work: a blacksmith made trees for the toy department forest, an electrician crafted the train and animatronics were ordered from France. Massive gift boxes meant to block out the escalators and ballerinas made out of HBC’s old yoga mannequins and crepe paper were also constructed and installed.

Everything came together just in time for Sabayons to open in the home stretch of the holidays

“In four days, I think we had it was over 25,000 people that went through the store, and we wiped out over half my inventory,” Townsend said.

While his shelves were emptying, RioCan Real Estate Investment Trust signed a lease that will see Nations Experience move its grocery store, food hall and entertainment space into the former HBC location at Oakville Place, west of Toronto, by early 2027.

At the Shops at Pickering City Centre, Splitsville Bowl is due to move into the ex-Saks Off Fifth space by fall 2026 — and the company’s managing director hinted that might not be the last Saks it takes over.

“We’ve got a number of different opportunities that we’re currently looking at across Canada where previous Saks and Hudson Bay’s sites have been that we’ve been offered by landlords,” Andy Johnson said. “Hopefully, we can make some of those work.”

JLL has predicted 65 per cent of HBC’s vacant retail space will be committed to new retail tenants within two years but says the majority of the units will take multiple tenants to fill. Twenty-two per cent will likely be redeveloped, perhaps into the condos, offices and community hubs landlords mused about while fighting Liu’s push to move into their properties.

One of the most dramatic reimaginings could come in Montreal. Cree organization the James Bay Eeyou Corp. and real estate developer JHD Immobilier want to spend nearly $400 million turning HBC’s former Ste-Catherine Street store into a fur trade museum, Indigenous cultural centre and a hotel complex opening by 2029.

“We see this project as a way to give the building new life while preserving its soul,” said Henry Gull, president of the James Bay Eeyou Corporation, in a September statement.

Townsend feels the same about Sabayons. In fact, its name is a blend of the retailers — Saba Bros., Eaton’s and The Bay — operating on the Bay Centre land before his store.

He’s not aiming to recreate those businesses, but he’s proud he re-energized their former home so much that he recently had to take a 28-day buying trip to Europe to scoop up enough product to satiate demand.

While he doesn’t imagine opening more Sabayons stores in former HBC properties, he’s not completely ruling out opening another store under a different name by his East Coast shipping hub.

“For logistics it would make a lot of sense to have a representation out on that side of the country, but definitely nothing in the near future,” Townsend said.

This report by The Canadian Press was first published March 6, 2027.

Tara Deschamps, The Canadian Press