Target's exit from Canada to pressure commercial property market
By Susan Taylor and Allison Lampert
TORONTO/MONTREAL Jan 15 (Reuters) - Target Corp's abrupt decision to withdraw from Canada is troubling news for many mall owners, as the most obvious potential buyer of property assets - Wal-Mart - is expected to cherry-pick from Target's 133 locations.
Minneapolis-based Target, the second-biggest U.S. discounter, obtained creditor protection for the Canadian unit and said on Thursday it will seek to sell real estate assets, including leases for some 14.7 million square feet of retail space.
"There's going to be a spike in vacancy rates - there's no question," said David Bell, a senior retail consultant with Colliers International, noting the impact will also affect smaller tenants within malls.
"You're probably going to see some mall managers move tenants around, pretty quickly. This is going to be, 'Let's get the war map on the wall.'"
Wal-Mart Stores Inc, the world's biggest retailer, already has stores near most Target locations, said Jim Danahy, chief executive of consultancy CustomerLAB. He said any big buy-out deal could raise competition concerns with regulators.
Target's retreat also means retailers are more likely to take a measured approach to Canadian expansion, rather than emulate the large-scale push that failed the U.S. discounter.
One Canadian mall owner, who has Target stores in his shopping centers, said the company's departure leaves him with two choices.
"One, you need to see if a large retailer like Wal-Mart will come in and take up the space. Or you need to break up the space to attract tenants," said the owner, who did not want to be named. Continued...