Nordstrom鈥檚 departure from Canada鈥檚 retail landscape will leave significant holes in shopping malls, and some analysts say landlords will need to get creative to fill the space.
If malls want to find similar tenants to Nordstrom, they might look to department store rivals Hudson鈥檚 Bay, Simons or Saks Fifth Avenue, said Tamara Szames, executive director and industry adviser of Canadian retail at the NPD Group research firm.
But with such companies heavily engaged in the apparel business 鈥� the only industry NPD Group tracks that has yet to recover from the COVID-19 pandemic 鈥� she thinks it鈥檚 more likely that Nordstrom鈥檚 landlords will think outside the box to fill the Seattle department store鈥檚 spaces.
鈥淐onsumers are going back into stores and we鈥檝e seen they鈥檙e really looking for an entertainment experience (along with) shopping, so being creative with the leases and rentals of these properties is something that mall owners will have to look at,鈥� she said.
She pointed to pop-ups, food properties and experience-based spaces like the World of Barbie 鈥� an interactive, ticketed version of Barbie鈥檚 Dreamhouse at the Square One Shopping Centre in Mississauga, Ont., as potential Nordstrom replacements.
Kate Camenzuli, vice-president of retail at real estate firm CBRE, echoed those sentiments.
鈥淭he world is our oyster,鈥� she said. 鈥淭hese (landlords) travel globally, to see everything that鈥檚 available, and so it may be something that we haven鈥檛 even seen yet in the Canadian market, and that might not be a department store. It may not even be a food hall.鈥�
Nordstrom鈥檚 largest Canadian landlord, Cadillac Fairview, has yet to outline specific plans for the departing chain鈥檚 spaces, which are often anchor tenants at its malls.
鈥淐adillac Fairview is constantly assessing the ever-changing retail landscape and while it鈥檚 too early to speculate what we will do with these spaces in the future, our team is working diligently to manage this change and work toward an outcome that is in the best interests of our centres and our long-term success,鈥� said spokesperson Janine Ramparas, in an email.
Nordstrom鈥檚 six Canadian stores 鈥� CF Chinook Centre in Calgary, CF Rideau Centre in Ottawa, CF Pacific Centre in Vancouver and CF Eaton Centre, Yorkdale Shopping Centre and CF Sherway Gardens in Toronto 鈥� have between seven and 10 years remaining on their leases.
Nordstrom Rack, which promised luxury brands at bargain prices, has seven Canadian stores with between five and eight years left on their leases.
Nordstrom intends to shutter both chains鈥� Canadian locations by June, leaving its 2,500 Canadian staff unemployed and hundreds of thousands of space to fill.
The CF Eaton Centre location alone took over 220,000 square feet over three levels, when it opened in 2018.
Camenzuli expects Nordstrom鈥檚 landlords to look at each space individually and assess what sort of vibe they鈥檙e looking to curate at the property.
For some, that could lead to Nordstrom being replaced by another large format retailer or an international brand looking to expand or break into Canada.
In other instances, it will mean the hulking spaces Nordstrom occupies will be broken into smaller stores that can be leased to a wider range of tenants not needing as much space.
Dollarama Inc. and TJX Companies Inc., which owns Winners, HomeSense and Marshalls, have all been looking for space, along with grocers, liquor stores, pet businesses, nail and hair salons and medical offices and clinics, RioCan Real Estate Investment Trust has said in recent quarters.
Many have been eyeing Bed, Bath and Beyond locations, which are due to close because the company has filed for bankruptcy protection.
Any company looking to expand will find Nordstrom鈥檚 old digs attractive, said Camenzuli, because the company had prime properties in high-traffic areas.
Even if Nordstrom鈥檚 landlords were caught off guard by the chain鈥檚 departure, she said most large real estate companies always have plans for who they want to attract should their tenants depart.
鈥淎s much as it鈥檚 sad to see a Nordstrom player leave, it gives us an opportunity to do things that haven鈥檛 been done before,鈥� she said.
鈥淎nd all of those teams that now have these opportunities have probably like had all these things in their back pocket that they鈥檝e been thinking about for months.鈥�
鈥擳ara Deschamps, The Canadian Press
