Bracing for Sears closures

Photo: The Canadian Press

Sears Canada Chief Financial Officer Billy Wong leaves Ontario Superior Court in Toronto on July 13.

At Heritage Place Mall in Owen Sound, Ont., an empty Sears department store would leave a mammoth void. The insolvent retailer is one of the mall's largest occupants. More than 60 people work in the anchor tenant's roughly 6,500 square metres, a space big enough to fit 14 basketball courts.

If the court approves Sears Canada's bid to liquidate its roughly 130 remaining stores, the decision will send shoppers, employees and mall owners in Owen Sound and dozens of other smaller Canadian cities scrambling to find alternative shopping destinations, jobs and tenants.

"My first reaction was: Oh, crap," said Owen Sound Mayor Ian Boddy of hearing the nearly 30-year-old location, is likely to close soon. "We're pretty disappointed."

A closure will hurt the local economy, he said, leaving dozens unemployed and perhaps prompting fewer people to travel to the region to shop.

Some 4,000 kilometres away on the West Coast, the mayor of Prince George, B.C., echoed those concerns about the Sears store at its Pine Centre Mall.

"It will have a direct economic impact on our community," said Lyn Hall.

The store employs more than 60 people, he said, and sells goods and services to hundreds of thousands living in Prince George and the surrounding areas.

Both leaders wondered how their local malls would cope with an anchor tenant's departure.

The bulk of the former juggernaut's stores are in smaller Canadian cities, where the store may serve a larger geographic area than just those living within the city's borders.

Of Sears's remaining 74 department stores, all but one are in shopping malls, most in areas with populations under 400,000 and some well under that.

The malls in these so-called secondary or tertiary markets are likely to struggle to fill the vacant space in the event Sears doesn't sell its leases or real estate to a third party, said Peter D. Morris, the founder of Greenstead Consulting Group, a real-estate consultancy firm.

"I fear some of those smaller properties may not be able to come back at all," he said, declining to speculate which of the malls may go under.

There isn't another big department store chain that requires that much space waiting on the sidelines, he said.

For malls that don't draw another single anchor tenant, he said, the easiest solution would be to divvy up the former department store space and woo intermediate-size shops.