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CTV News
3 days ago
- Business
- CTV News
The Bay's departure leaves a gaping hole in downtown Toronto. What could fill it?
The flagship Hudson's Bay Company store is pictured in Toronto on January 27, 2014. THE CANADIAN PRESS/Nathan Denette When The Bay finally closed up shop after 355 years, the defunct retailer left more than memories in Toronto's downtown core. The storied department store left in its wake a gaping hole of nearly 700,000 square feet at the corner of Yonge and Queen streets – a massive piece of prime real estate in the heart of the city. Since the doors shuttered to the public at the end of May, the space has been vacant, leaving Toronto residents wondering what might eventually fill the cavernous floors of the designated heritage building at 176 Yonge Street. 'I think that location, in a normal market, would be very, very, very ripe for redevelopment,' says Adam Jacobs, national head of research for Colliers Canada, which specializes in commercial real estate. He says such a project might include an office tower, condo tower, hotel – or a combination thereof – that would incorporate the historic building. But while the space is exactly the sort of location that might attract a grand vision, the timing for that sort of project might not be right. 'So I think the downtown Bay location, yeah, there's a lot of redevelopment potential there, but just right now, there's all these headwinds,' Jacobs says. Those headwinds include a general retreat from massive condo or office tower redevelopments, U.S. tariffs that could drive up supply costs and overall market uncertainty. Not to mention an ongoing subway construction project on the block for the Ontario Line that is expected to keep the street torn up for several years to come. The Bay People walk past the Hudson's Bay store in Toronto on Monday, March 10, 2025. THE CANADIAN PRESS/Chris Young 'It's just that we happen to be at a moment right now, where the whole condo market is, you know, frozen, and the land market is frozen, and nobody wants to lend money, and suddenly we're building too many apartments instead of not enough apartments. So I think right now, it's quite a bad moment for those big, visionary development projects,' Jacobs says. Still, he notes that large property owners like Cadillac Fairview, which owns the building, have vast holdings and can afford to wait for the right project and market conditions without having to rush to fill an empty building. In a statement to CP24, Cadillac Fairview said it is eyeing options for the site, but hasn't made any decisions yet. 'Cadillac Fairview is constantly assessing the ever-changing retail landscape to ensure the long term success of our shopping centres and the communities where we operate,' wrote Anna Ng, the company's director of corporate communications. 'Our teams are evaluating opportunities to backfill spaces formerly occupied by HBC and we look forward to sharing plans once confirmed.' The Bay walkway A shopper make his way through a walkway connecting Eaton Centre Mall and The Hudson Bay store in Toronto on Monday, May 1, 2023. THE CANADIAN PRESS/Chris Young One thing Jacobs is quite sure is not in the future for the building: 'I think it's unlikely that it will end up being a department store,' she said. Department store era over The building in the heart of Toronto has had a life as a department store for around 130 years. Known as The Simpson Departmental Store, the building was first erected in 1894 by Edmund Burke of architects Burke and Harwood. It suffered a fire the same year, but was rebuilt a year later, with various additions over the following decades. A city staff report dating back to 2015 notes the building is 'designated on architectural grounds as an outstanding example of late nineteenth century commercial design.' According to the city, 'it is an early example of the use of steel post and beam construction in Canada and of the work of one of Toronto's most important architects.' While that makes it one of the oldest department store buildings around, it is certainly not the first staring down a potential change of use. 'The demise of department stores has been long coming, and so the interesting thing is, we now have a big history of takeovers and adaptive reuse,' says Karen Chapple, director of the School of Cities at the University of Toronto. The Bay The Roll of Honour, a memorial to employees of the defunct retailer Simpson's who served with the Canadian Forces and were killed during the Second World War, is shown at the Hudson's Bay store in Toronto, Tuesday, April 22, 2025. THE CANADIAN PRESS/Giordano Ciampini She points out that when the May department store company went under in the U.S., one of their buildings in Cleveland became a residential development, while another in Los Angeles became the Academy Museum of Motion Pictures. Others, she says, became spaces for educational institutions. 'There's so much history too, of malls being transformed into residential use or mixed use with residential. You might have residential, retail, fitness, movie theater, office space – all of that,' Chappel adds. With the attached Eaton Centre acting as a sort of 'public arena,' she says it would be good to keep the space at The Bay public or semi-public as opposed to cordoning it off for an entirely private use. However she agrees with Jacobs that the building's time as a department store is likely over. 'You're just not going to be able to do retail (for the whole building) at this point in time,' she said. Core continues to change Coun. Chris Moise, who represents the downtown ward where the property is located, said he'd like to see any new use take into account the needs of the community, as well as the throngs of people who pour into the area on transit. 'I think we have to think outside of the box and see, what is the missing middle here? And how can we make it work for everybody,' Moise says. Off the top of his head, he says a grocery store and an entertainment complex could be good fits for the area. The Bay People walk past the Hudson's Bay store in Toronto on Monday March 10, 2025. THE CANADIAN PRESS/Chris Young He says it's unlikely the space will be completely rezoned into a condo development, as some might fear. 'That's an historic building, iconic building, you know, it's on Yonge Street. It's a whole block. I don't think that's going to happen,' Moise says. He points out the site will eventually sit atop two transit lines and is surrounded by theatres, stores, and other spaces that draw people out. In terms of possible city uses, the municipality already has an excess of space nearby. 'Don't forget, the Ontario Line is going to be right there as well and we're looking at Old City Hall to see what to do with that venue,' Moise says. Possible ideas being floated for the Old City Hall site include a museum, an arts facility, an event venue and a library and Moise says he's hoping it will become 'part of the destination' for the area. The Bay Ontario Line construction is seen on Queen Street, between the Hudson's Bay building and the Eaton Centre January 14, 2024. (Joshua Freeman) While the future of the Bay's flagship store is still in the air, Moise says he's in regular discussion with the Downtown Yonge BIA, as well as Cadillac Fairview, which he says is receptive to suggestions. Future uncertain, but reason for optimism Jacobs points out that the dust has not entirely settled on Hudson's Bay's demise. A court battle remains underway between lenders, landlords, and B.C. billionaire Ruby Liu, who wants to buy up to 25 Hudson's Bay leases to open up a new retailer. Whatever the future holds for the site, though, there seems to be consensus that the problem of what to bring to the area is a good one. Chapple says data gathered by UofT researchers show that Toronto's downtown is experiencing a 'slow recovery,' as we get further from the COVID-19 pandemic though the increase in traffic is more attributable to people coming into the core for pleasure rather than work. 'I always see these things as an opportunity. I mean, I think we do too much hand-wringing over change when actually to have a huge site like this open up in the heart of Toronto with incredible transit accessibility, with a rich history (is an opportunity),' Chappel says. Jacobs echoes that idea. 'It's such a unique location, being in the financial core, being right downtown, being right on a subway stop, being a historic building, that I guess I feel pretty optimistic,' he says. With files from The Canadian Press
Yahoo
19-06-2025
- Business
- Yahoo
Trophy offices in Canada's big cities are outperforming the rest. That's not normal
Demand for premium office space in Canada's biggest cities has been extraordinarily resilient, a new report from Colliers Canada says, dramatically outpacing the performance of lower-tier buildings as paradigm shifts continue to reshape work culture. This year, vacancy rates for A-, B- and C-class office buildings are around 16 per cent, while trophy-, or AAA-, class buildings had a vacancy rate of around seven per cent — the widest gap in at least a decade and a striking shift from pre-pandemic norms, when cheaper buildings were typically more in demand. 'If you look historically, that's not usually what happens,' said Adam Jacobs, Colliers Canada's head of research, in an interview with Yahoo Finance Canada. 'But there is kind of a new reality of work that we're all trying to figure out. You know, the return to the office.' The Colliers report says that 'demand is increasingly consolidating around top-tier, best-in-class spaces, with tenants prioritizing quality, location, and amenities over cost alone.' Colliers data show lower-tier buildings having generally lower vacancy rates than trophy-class from 2015 to 2020, which Jacobs says is the norm. The gap peaked in 2017 with trophy-class vacancy rates 3.3 percentage points higher than for lower-tier. The vacancy rates for trophy and lower classes drew even in 2019. Through the pandemic, vacancy rates rose for all building types — but the rise was steeper for lower tier. Around 2023, vacancies in AAA-class buildings levelled off and began to decline, while lower-tier vacancies continued higher. The lower-tier vacancy rate is now 8.9 percentage points higher than for AAA. There is a feeling among certain tenants especially, 'We've got to give the employees a reason to be here.'Adam Jacobs, Colliers Canada Colliers notes similar widening spreads for availability (similar to vacancy but also including currently occupied units that can be leased) and absorption (the amount of space being newly occupied or newly vacant). 'The gap between AAA and the rest of downtown [office space] is just becoming larger and larger and larger to the point where I'm not sure how much larger it can get,' Jacobs said. Most of the recent premium buildings in Toronto, Montreal and Vancouver had big-name tenants before construction started — Jacobs pointed to a 'big boom' in tech companies looking for 'the top-drawer stuff.' Since then, the Colliers report notes, trophy-class demand has been 'further supported by renewals, lease extensions, and general interest in top-tier premises where large pockets of vacant space had been unlocked.' One of the drivers of this interest, Jacobs says, is the pressure the era of working from home has put on employers now trying to bring employees back to the office full or part-time. 'There is a feeling among certain tenants especially, 'We've got to give the employees a reason to be here,'' Jacobs said. ''We have great amenities. We have great coffee, we have great food, we have a great view, we have a prayer room, we have a green building. We have everything, you know, tick every box.'' Location is also a factor, with proximity to transit corridors essential for people less willing to deal with arduous commutes and parking. 'It's harder and harder and harder to get downtown than it used to be,' Jacobs said. 'And that sort of weirdly benefited these really premium buildings, because it's like, just get on the suburban train, show up at the main rail station and you're a one-minute walk from your building. Because [AAA class] have the best locations.' Regardless, the current reality is highly unusual, Jacobs says. "AAA office is a luxury product. Like, it's expensive, and I would say most tenants can't afford AAA office. So generally it has a bit higher vacancy." Colliers says the vacancy rate gap is 'expected to peak as premium supply tightens, driving renewed interest in broader downtown inventory,' as more firms look to bring workers back to their offices. Jacobs says several factors — the 'boom or bust' development cycle, a tough lending environment for major real estate developments, the major pension funds largely investing outside of commercial real estate — mean there won't be any new premium office spaces in the next five years. That alone means some organizations will eventually seek out options in the next tier. 'This has already been a very prolonged increase in vacancy,' Jacobs said. "It's usually like, vacancy goes up for maybe two, two-and-a-half years, and it levels off, and then it starts coming back down. It's been going up for five-and-a-half years, and we are still waiting for it to peak.' John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf. Download the Yahoo Finance app, available for Apple and Android. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
