The iconic red and white Hudson’s Bay department stores—fixtures in Canadian shopping malls for generations—are poised for a dramatic transformation as the 354-year-old retailer pivots from traditional retail spaces toward a new digital-first strategy.
In a move that signals the continuing evolution of brick-and-mortar retail, Hudson’s Bay announced yesterday it has reached an agreement to sell up to 28 store leases to QuadReal Property Group, a British Columbia-based commercial real estate company that manages $73.8 billion in assets. The transaction, valued at $775 million, represents nearly a third of The Bay’s 84 locations across Canada.
“This isn’t just another retail restructuring—it’s a fundamental reimagining of what department stores mean in the Amazon era,” says Retail Council of Canada analyst Diane Brisebois. “Hudson’s Bay is essentially cashing out premium real estate to fund its e-commerce future.”
The deal follows a pattern established by several major North American retailers who have separated their valuable real estate from operational businesses. Sears attempted a similar strategy before its eventual collapse, while Macy’s has pursued comparable real estate monetization in the United States.
Richard Baker, executive chairman of Hudson’s Bay Company, framed the decision as strategic rather than desperate. “This transaction allows us to unlock significant value while maintaining the locations that best serve our customers,” Baker stated in the press release. “The capital will accelerate our digital transformation while preserving the Hudson’s Bay legacy.”
The retailer hasn’t disclosed which specific locations are included in the deal, creating uncertainty for mall operators and the thousands of employees at potentially affected stores. The company indicated only that the transaction involves “non-core” properties, suggesting larger flagship locations in downtown Toronto, Montreal, and Vancouver may be spared.
For Canadian shopping centers already struggling with declining foot traffic, the departure of Hudson’s Bay as an anchor tenant could trigger domino effects. Department stores traditionally drive customer visits that benefit smaller retailers in the same mall.
“When you lose an anchor tenant like The Bay, you’re not just losing one store—you’re potentially reducing traffic to the entire property by 15 to 20 percent,” explains commercial real estate consultant Alexandra Shiu of Colliers Canada. “These large spaces are incredibly difficult to repurpose in today’s market.”
QuadReal’s interest in acquiring these leases indicates the mall owner sees opportunity where others might see decline. Industry insiders suggest the company likely has plans to redevelop these spaces into mixed-use properties combining residential, office, and experiential retail concepts.
The transaction comes amid challenging times for department stores globally. Statistics Canada data shows department store sales declined 13% between 2019 and 2024, while e-commerce sales grew by 68% during the same period. Hudson’s Bay itself has weathered bankruptcy protection for its U.S. operations and weathered significant leadership changes over the past five years.
“Department stores were built for a world where people couldn’t easily compare prices and needed to see everything in one place,” says Tandy Thomas, associate professor of marketing at Queen’s University. “That world no longer exists. The modern consumer wants convenience, personalization, and experiences that can’t be replicated online.”
For communities with Bay locations on the potential closure list, the impact extends beyond shopping. Many of these stores have served as community landmarks and employers for decades. In smaller cities like Kingston or Peterborough, a Hudson’s Bay closure represents the end of an era that stretches back to Canada’s early retail history.
The Bay’s transformation mirrors broader shifts in Canadian retail, where traditional retail footprints are shrinking while specialized boutiques and immersive concepts expand. Recent Statistics Canada employment figures show retail sector jobs fell by 1.2% year-over-year, with department stores accounting for the majority of those losses.
Industry analysts suggest Hudson’s Bay will likely use proceeds from the deal to invest in digital infrastructure, reimagine remaining flagship stores, and potentially develop specialized retail concepts like those pursued by Nordstrom and other upmarket retailers who have successfully navigated the transition to omnichannel retail.
“This isn’t the end of Hudson’s Bay, but it’s certainly the end of Hudson’s Bay as previous generations knew it,” says retail futurist Doug Stephens. “The most successful retailers are becoming more like media companies—creating content and experiences that draw consumers in, whether physically or digitally.”
For mall owners left with empty Bay locations not included in the QuadReal deal, the future remains uncertain. Redeveloping department store spaces requires significant capital investment and creative vision. Some successful transformations have included indoor farming operations, healthcare facilities, coworking spaces, and entertainment venues.
The transaction is expected to close in phases between late 2025 and early 2026, subject to conditions including due diligence and receipt of required third-party consents. Hudson’s Bay has committed to providing more details about specific locations after the first closing phase.
As Canada’s oldest company reinvents itself yet again, the iconic department store’s evolution offers a window into retail’s challenging future—one where physical space must be carefully balanced against digital presence, and where even the most established brands must adapt or fade away.
