Real estate magnate Ruby Liu is stepping into the Canadian retail landscape with a bold plan to transform up to 28 former Hudson’s Bay and Saks store locations into a new modern department store concept. While she has secured the leases, turning this vision into reality faces significant hurdles, particularly gaining approval from landlords and undertaking massive renovation projects.
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This move follows Hudson’s Bay’s decision to liquidate and sell off its assets, with Canadian Tire set to acquire the brand name and trademark. Liu, who initially attempted to buy the entire company, pivoted to acquiring prime real estate leases held by the legacy retailer.
Key Takeaways:
- Ruby Liu’s Central Walk secured leases for up to 28 former Hudson’s Bay and Saks locations.
- The plan is to launch a new, modern department store concept.
- Major challenges include securing landlord consent for lease transfers and financing extensive store renovations.
- Experts highlight the complexity of renegotiating old “trophy leases” with deeply discounted rents.
- The potential success hinges on creating a compelling retail destination and overcoming significant operational and financial obstacles.
The Vision: A New Era for Canadian Department Stores?
Ruby Liu, known for her successful real estate developments in China and acquisitions of Canadian malls like Tsawwassen Mills and Mayfair Shopping Centre through her company Central Walk, is now setting her sights on reinventing the department store model in Canada. Her ambition is to create destination-focused retail spaces, potentially mirroring the dynamic, multi-faceted department stores found in Asia that include supermarkets, restaurants, salons, and entertainment options.
This approach aims to differentiate from traditional North American department stores and potentially fill a gap in the market left by shifting consumer habits and the decline of legacy retailers like Hudson’s Bay in its previous form.
Ruby Liu, chairwoman of Central Walk, in a professional pose
The First Hurdle: Winning Over Landlords
The most immediate challenge for Liu is securing the approval of the landlords who own the properties where these former Bay and Saks stores are located. Experts like Don Gregor of Aurora Realty Consultants suggest this will be a complex negotiation. Many of the acquired leases are considered “trophy leases,” secured decades ago by Hudson’s Bay as anchor tenants.
These agreements often feature below-market rent rates and clauses that give the anchor tenant significant control over the mall or property, restricting what other businesses can operate or what developments can occur on site. Landlords typically prefer to regain control of these spaces, especially after the anchor tenant’s decline, to renegotiate terms or bring in new tenants on less restrictive, higher-rent agreements. Liu’s plan requires landlords to agree to transfer these favorable terms to her new, untested retail concept.
The Cost of Transformation: Renovations and Operations
Beyond landlord negotiations, the financial and operational challenges are substantial. Retail strategist Lisa Hutcheson points out that many of the aging Bay stores have significant deferred maintenance issues, including costly HVAC repairs and broken escalators. Repairing just an HVAC system in a large location could cost upwards of half a million dollars.
Industry estimates suggest repositioning these large format stores could require investments of $100 to $150 per square foot or more, potentially totaling tens of millions of dollars per location given their size. This is in addition to the capital needed for inventory, staffing, and developing the new brand and concept.
Creating a viable concept that can compete with established players like Simons and Holt Renfrew, as well as the dominant e-commerce market, requires not only significant capital but also fostering new relationships with suppliers who may be hesitant after financial losses from the Bay’s struggles. Liu has indicated she will prioritize former Bay suppliers and staff, aiming to leverage existing relationships and expertise, but attracting and retaining a large workforce for a new brand will be crucial.
The Outlook: High Risk, Potentially High Reward
While the path forward is fraught with difficulties, experts acknowledge the potential upside. If Liu can successfully navigate the landlord approvals, secure the necessary funding for renovations, and execute her vision of a modern, destination-based department store, she could indeed “usher in a new form of retail” in Canada. Landlords also have an incentive to fill large vacant spaces quickly, which could work in Liu’s favor if her plan is compelling enough.
The success of this ambitious undertaking hinges on complex negotiations, massive capital investment, and the ability to build a compelling retail experience from the ground up in a challenging market. The coming months will reveal whether Liu’s persistence and resources can overcome these significant obstacles.
