Target recently announced its set to close all 133 Canadian locations. Shoppers interviewed by the media say they are sad to see them go, but it is clear that Wal-Mart stores have been far busier.
The Canadian arm of the giant retailer reportedly racked up $2 billion of losses in less than 24 months. While some might argue that the store just wasn’t competitive enough, others would debate the company just moved to fast.
Many landlords say they made sure Target’s main US headquarters guaranteed leases, so do not expect to take losses on leases which were expected to last an average of another 12 years. There will be some disparity in how these spaces fill up, but there is still no shortage of demand for retail space in booming hubs like Edmonton. If it isn’t Wal-Mart absorbing the space, it could be their competitors such as Loblaws, smaller luxury retailers, innovative discount stores or local startups that are now spreading their wings.
Together with the recent Sony closures and the pull back of Google Glass, Target’s story is a reminder for investors to seek out a good mix of retail tenants and leverage strong partnerships in investment properties. In order to be safe and to command top yields, investors need to look to ideal locations, tenants and leases before getting into the commercial retail market.