Big changes are coming at Toronto's landmark mall.
The press learned this morning that Sears has sold back its lease on its Eaton Centre location as part of a $400 million deal with the mall’s landlord, Cadillac Fairview. Sears will also relinquish its claims on spaces in four other Cadillac Fairview malls, two of them in the GTA.
The Eaton Centre store is expected to close by February 28, leaving a vacancy in one of downtown’s biggest and highest-profile retail locations. For most of us, this means two things:
- Toronto’s biggest closeout sale in decades, at some point in the next few months.
- Nordstrom at Yonge-Dundas Square.
The first thing seems like a certainty (what else are they going to do with all the extra merchandise?), but the second is still speculation. Nordstrom, a Seattle-based upscale department-store chain, bought up three Sears leases at other Cadillac Fairview malls in September 2012, and is planning to move into newly built locations at Sherway Gardens in Etobicoke—another Cadillac Fairview property—and Yorkdale Mall. Since the chain has a preexisting business relationship with the Eaton Centre’s landlord, and since it seems bent on establishing itself in Toronto, it’s not such a stretch to suppose that it will be the replacement tenant. Nordstrom’s spokespeople haven’t confirmed the chain’s interest in the space.
For some Torontonians, though, the end to Sears’ more-than-decade-long run as the Eaton Centre’s flagship store will mean different things entirely. The Star reports that 335 of the estimated 965 employees affected by today’s announcement work at the Eaton Centre location. Some may be able to find jobs at Sears’ remaining Toronto-area locations, but many, in all likelihood, will find themselves unemployed.
For Sears executives, the leaseback deal will mean a quick cash infusion, perfect for propping up a money-losing business. According to the Post, Sears has sold or begun to sell 12 locations over the past year and a half, including this latest batch. Calvin McDonald, Sears’ former president and CEO, quit suddenly in September in the midst of an effort to revive the ailing retailer’s fortunes.
And For Cadillac Fairview, of course, the deal means money—potentially lots of it. Sears takes up about half of the leasable area at the Eaton Centre, although some of the store’s immense footprint has been converted into a corporate head office for the company. The Globe says Sears will be keeping four floors of office space. Even so, the newly empty square footage will be plentiful. The Globe also mentions that Sears is believed to have been paying relatively little rent on its Eaton Centre location (possibly a vestige of its takeover of Eaton’s, Eaton Centre’s one-time namesake department store, whose parent company went bankrupt in 1999). Nordstrom, presumably, would pay more.
This post originally said that Sears, as part of its $400 million deal with Cadillac Fairview, had agreed to vacate three GTA locations in addition to its Eaton Centre location. In fact, the company is vacating three GTA locations total, inclusive of the Eaton Centre.