TORONTO —

As Toys "R" Us Canada prepares to ask a court for permission to put the business up for sale, it's closing at least two more stores.

The chain has notified the landlords at the St. Laurent Centre in Ottawa and Woodgate Plaza in St. John's, N.L., that its stores there will soon close, its chief restructuring officer Neil Taylor said in court documents filed this week.

The filings show Toys "R" Us Canada will hand back both of those properties to landlords as well as two more locations it already closed at the Niagara Pen Centre in Ontario and in Vaudreuil-Dorion, Que.

The closures are part of the retailer's creditor protection process, which began earlier this year when it was having trouble coping with its mounting debt and lawsuits from suppliers and landlords.

A judge gave the company permission last month to conduct liquidation sales at some of its remaining 22 stores. In the two years leading up to its creditor protection application, it closed 53 stores across Canada.

The retailer will head back to court next month to get permission to launch a sales process for the business.

An affidavit from Taylor argued that sales process is "the best available option to maximize" what value is left in the company for stakeholders. It said the company will continue to operate like normal while marketing itself to buyers.

If a court gives the go-ahead, filings show anyone interested in buying the business or its assets will make bids in May before Toys "R" Us Canada will choose one or more buyers in June.

It will aim to close on any deals it reaches by July 13 — the same date the company will ask a court next week to extend its reprieve from creditors until.

A Toys "R" Us Canada spokesperson and several lawyers representing the firm did not respond to a request for comment about the new filings.

The retailer has been owned by Putman Investments since 2021, when the Ancaster, Ont.-based company bought Toys "R" Us from Fairfax Financial Holdings Ltd.

Fairfax paid $300 million to rescue the company and Babies "R" Us Canada in 2018, when it filed for creditor protection after the separately-run American arm of Toys "R" Us sought bankruptcy protection.

Putman also owns retailers HMV, Sunrise Records, Ricki's, Cleo and Northern Reflections and previously operated a chain of home goods stores called Rooms + Spaces and many T. Kettle tea shops. Rooms + Spaces and T. Kettle have closed all their stories.

This report by The Canadian Press was first published March 27, 2026.

As cities across North America continue to deal with office space made surplus when remote work arrangements became mainstream during the pandemic, the concept of converting office buildings into other uses has been much discussed. In reality, however, office conversions have only taken off in a few small pockets.

Return-to-office is still being sorted out but a bifurcation in the office market is clear. Upper tier space (Class AAA and A) remain strong, while and lower Class B and C space is bearing the brunt of the struggles in most markets.

As one example, vacancy rates in AAA, A, B and C buildings in Vancouver were all just below 5 per cent in the third quarter of 2019, according to data published by commercial real estate services firm Avison Young in mid-January. Following the fourth quarter of 2025, the vacancy rate of AAA and A buildings are both around 9 per cent, while the vacancy rate of B and C buildings have shot up to 12 per cent and 16 per cent, respectively.

This is the so-called “flight to quality” and it’s a trend that can be seen in most of the major office markets in Western Canada in varying degrees. The question for office landlords, then, is what to do with those B and C buildings.

CALGARY

Calgary is ground zero for office conversions, not just in Canada, but across North America, with about 2.7 million square feet of space across 21 office buildings converted or in the process of being converted. Calgary had a head start, however, as its office market slumped along with the energy sector in 2015, with office vacancy peaking at over 30 per cent. In response, the City of Calgary created a suite of downtown conversion incentives, offering $75 per square foot of office space converted.

“We’re actually seeing conversions across the entire downtown market,” said Walsh Mannas, principal with Avison Young’s capital markets group in Calgary. “We have some very obsolete buildings that are natural conversions, but if the opportunity presents itself with a building like Chevron [Plaza] that’s a higher-quality building but ended up in a scenario with 100 per cent vacancy, that is also being looked at by converters.”

According to Mannas, any office building with a significant vacancy is being examined for conversion. In recent years, large institutions have been selling their office assets in Calgary, creating a “generational opportunity” for smaller private firms to snatch up assets they may not have ever been able to touch if not for the current market dynamics. A small handful of groups have homed in on conversions, but there is a decreasing number of available assets as a result of elevated transaction levels in recent years.

“There’s been a flight to quality for years, so those higher-quality AA or A buildings that have been greatly improved are seeing greater success,” said Mannas. “And more often than not, those landlords are willing to build out turnkey spaces for these tenants, and that is what you need to compete in the financial core office market. There is still demand in the West End, where 90 per cent of our conversions are taking place, but the story is a bit different there. Those tenants are smaller, they can be private firms, they’re 2,000 to 8,000 square feet – they’re not building out the same quality of space and the same quality of amenities, but you are still improving that space.”

Municipal elections were held in October, and a few cracks emerged after some councillors voiced opposition to the incentive program, with concern about whether it is the best use of taxpayer dollars, although newly elected Mayor Jeromy Farkas voiced support for it and downtown revitalization.

EDMONTON

In fall 2023, facing an office vacancy that was rising past 20 per cent, Edmonton began exploring its own office conversion incentive program. An incentive program offering $100 per square foot was discussed, but ultimately did not come to fruition after the city was unable to find funding for the program.

There are still a few conversions happening, such as the partial conversion of the Phipps McKinnon building and Standard Life Centre by Josan Properties and Leder Investments, respectively. Most office landlords have not been able to fall back on conversion as a repositioning strategy, however.

“Ultimately, I think the reason these investors aren’t going ahead with conversions at the same pace as Calgary developers are is just the high cost,” said Reed Newnham, principal with Avison Young’s capital markets group in Edmonton. “There’s large risks with these ’60s and ’70s vintage buildings.”

Considerations include the floor plate and the right configuration of mechanical systems, plumbing, HVAC – all of which can easily cause the cost of development to spiral far beyond the original budget.

“That’s why we’re seeing most of our investors look to just reposition, add amenity space, and increase the ability of that building to compete,” he added, noting that show suites – units that are fitted out and turnkey – have been a strategy landlords have used in both Edmonton and Calgary. “There’s a lot of options on the market, so any tenant who’s cost-conscious and looking in the Class B and C inventory – as a landlord you need to find a way to differentiate your space and your offering.”

Discussions of an incentive program have died down, but it’s worth noting that Edmonton’s local election in October saw Andrew Knack elected as mayor, and Knack was the councillor who led the push for the incentive program two years ago.

REGINA AND VANCOUVER

Two other notable Western Canada markets are Regina and Vancouver, and they’re notable for the same reason: both have remained relatively stable, albeit on drastically different scales.

“Pre-pandemic to today, there hasn’t been a whole lot of change,” said Linely Schaefer, Avison Young’s managing director in Regina. “We’ve always had vacancy in our market. We’re a government-driven town, so all of our A space is basically occupied by the government and various other privates. Our vacancy is in the mid-teens, with a healthy market being around 9 per cent. Do we have a ways to go? Sure. Do we have huge blocks just sitting there? Other than one or two, there’s not … We’re Saskatchewan: no peaks, no valleys. Just steady going.”

Regina actually has an office-to-residential conversion incentive program of its own, offering the same $75 per square foot that Calgary offers, but Schaefer said little to no conversions are happening because few of the buildings are suitable for conversion and the cost of constructing a brand new building is not as high as it is in other markets.

Vancouver is a significantly larger market and its vacancy rate has risen in recent years, but its vacancy rate remains one of the lowest in North America. There’s been some flight to quality, but the gap between the upper echelon and lower echelon of office buildings is not as drastic as it is in some other markets.

“One important aspect to bear in mind in the Vancouver market is that although a lot of tenants would like to fly to quality, we don’t necessarily have enough A and AAA space to accommodate them,” said Avison Young’s Michael Emmott. “This market in some ways is short on that very upper echelon of office building, which I think is part of the reason why we’re not seeing some of the B and C buildings empty as fast as perhaps in other markets. There’s still demand for B and C buildings. Not everyone is willing or able to afford the rents and operating costs for the highest-standard office.”

As there have been much less vacancy to work with, Vancouver has seen very few office-to-residential conversions in recent years. What Vancouver has seen, however, as the municipal government pushes for more hotel rooms, is some office-to-hotel conversions, such as Reliance Properties and Germain Hotels’ conversion of 1111 West Hastings.

“Pure residential conversions have not, at this stage, been encouraged,” said Emmott. “We’re also not long on vacant buildings yet, and it does take a significant amount of time to empty an office building. Unless you have a single tenant expiry, you would probably have to live through several years of vacancy in your building as tenants empty one by one, and that can be a very expensive process.”

Office conversions are therefore largely dependent on local market conditions, and a function of necessity rather than choice. And as 2026 unfolds, Avison Young’s experts all see stability and upside for their respective markets, with flight to quality persisting and landlords continuing to find ways to reposition their buildings, with or without conversions.

Four days before Christmas, shoppers lined up around the Bay Centre in Victoria, B.C., where a corner of the mall had been transformed into a scene reminiscent of a London high street.

In the windows, animatronic bears and groundhogs in aprons and chef's hats toddled around. Inside, Santa rode in a hot-air balloon hanging from the ceiling while an old-timey train display offered a rainbow of sweets and other delicacies and shoppers perused toys under a canopy of foliage.

"We put great effort into creating the magic," recalled Ryan Townsend, whose new department store Sabayons was responsible for the holiday whimsy.

The business has been breathing new life into a property that just a year ago was on the verge of being dark and empty.

Canada's oldest company Hudson's Bay filed for creditor protection on March 7, 2025, under the weight of $1.1 billion in debt. The move kick-started a complex legal process that's still ongoing as the 355-year-old business winds down, and resulted in the closure of its 80 stores and 16 more under its sister Saks banners.

A year later, a Canadian Press analysis has found the vast majority — at least 73 former Hudson's Bay or Saks stores — are still empty, though a few of those have tenants preparing to move in. Some of those sites were once among the country's most prized shopping properties — along the stretch leading up to Toronto's Eaton Centre, by the ByWard Market in Ottawa and in the hearts of downtown Vancouver, Montreal and Calgary.

Other properties have already sprung back to life because of newcomers like Sabayons or mall regulars taking advantage of HBC's demise to spur their own growth.

The Canadian Press counted 14 former HBC and Saks properties taken over by YM Inc. brands Urban Behaviour and Urban Planet, three now home to Continental discount clothing stores and three hosting Designer Depots.

A Zellers reboot has moved into part of the ex-HBC space at Londonderry Mall in Edmonton and Goodwill has replaced Saks Off Fifth on the Queensway in Toronto. Furniture stores Nuevo and Accents@Home have each taken over one property in Quebec and Alberta, respectively.

The patchwork of tenants is a reminder that there isn't a one-size-fits-all solution for these massive, complex spaces that have rarely hosted anything other than a department store since their inception.

With the traditional department store model waning as more people shop online and brands increasingly open their own stores to sell directly to consumers, landlords now have the unenviable task of luring in the few businesses still wanting mammoth properties or reimagining the properties completely.

That many of the properties are still vacant doesn't indicate a lack of effort on the part of landlords, said Don Gregor, an executive vice-president at Aurora Retail Group.

"When I'm talking to people like Oxford, Cadillac Fairview, Primaris, for example, they're still working on logistics, on how to use or break up the space," he said. "I think they're going to have some serious ideas by the end of the month ... but it's not going to be easy."

The largest HBC and Saks locations are mostly stand-alone, downtown properties that take up full city blocks with square footages around 600,000, but even some of the smaller properties will be hard for a single tenant to fill. HBC and Saks were often anchor tenants at malls, meaning they got prime, multi-level real estate and low rent fees in exchange for drawing foot traffic.

A January report from real estate firm JLL said the average mall lease in Canada sits at roughly 3,700 square feet. On average, HBC used 152,000 square feet per store, or roughly 40 times the space of your average shop.

Exacerbating the search is the fact that anyone who has wanted a property of HBC's size has had no shortage of options. The collapses of Sears, Target, Nordstrom and now Toys "R" Us in Canada have left many massive properties in prime shopping districts available even years after the retailers' departures.

"The very last of the Target locations was probably just leased in the last year," Gregor said, referencing the U.S. business that left Canada in 2015.

And many of them were in much better condition than HBC's sites, which were sorely in need of repairs to roofs, elevators and escalators, washrooms and heating, ventilation and air conditioning systems, court documents have said.

Much of that work couldn't start the moment HBC filed for creditor protection on the brink of March break because the company was still trying to find a Hail Mary solution that would keep six stores open and when it failed, its locations didn't close until June. Even when they did shutter, they still had to be emptied of fixtures and furniture and HBC had to renounce their leases before landlords could let anyone else move in.

At some sites, those tasks were completed within a few months, but it took longer at many others because HBC hung onto dozens of its leases in hopes of selling them to recover some of the $1.1 billion it owed creditors.

Billionaire Ruby Liu bought three leases in B.C. malls she owns for $6 million in June, and YM scooped up five for $5.03 million in July, when Ivanhoe Realties Inc. bought back one of the leases its parent company owns for $20,000.

But perhaps the biggest delay came from HBC's bid to sell Liu's company Central Walk 25 other leases for $69.1 million. The deal announced in May left stores empty all summer while the retailer battled landlords arguing Liu was ill-prepared to deliver on her plan to open self-named department stores with entertaining and dining spaces in their malls. It wasn't until October that a court blocked the sale, prompting HBC to start turning those properties back over to landlords in November.

Liu has yet to open stores in the ex-HBC and Saks properties at her three malls, despite once claiming she could have 20 operating within 180 days of buying leases. Spokespeople for Liu's company Central Walk did not respond to requests for comment on whether she still plans to open her own chain of department stores.

Central Walk's Mae Wang said in an email to The Canadian Press that the company is "working on plans for the space and have received strong interest from a number of well-known brands." She did not say whether Liu still plans to open her own chain of department stores.

Ryan Townsend, who also owns seed-purveyor-turned-boutique-grocer Market Garden, never doubted he'd make good on the ambitions he'd been harbouring for years before HBC collapsed and he opened Sabayons.

But by the time he pitched HBC about taking over the top floor for a gourmet food hall, the company was on the eve of filing for creditor protection.

Anxious not to let the opportunity pass him buy, Townsend bought truck trailers, shelving, lights and just about any fixtures he could get from HBC while trying to convince the Bay Centre to let him move in.

In late August, while he roamed Europe for merchandise, it became official: He had a lease for HBC's ground floor.

Townsend got to work: a blacksmith made trees for the toy department forest, an electrician crafted the train and animatronics were ordered from France. Massive gift boxes meant to block out the escalators and ballerinas made out of HBC's old yoga mannequins and crepe paper were also constructed and installed.

Everything came together just in time for Sabayons to open in the home stretch of the holidays

"In four days, I think we had it was over 25,000 people that went through the store, and we wiped out over half my inventory," Townsend said.

While his shelves were emptying, RioCan Real Estate Investment Trust signed a lease that will see Nations Experience move its grocery store, food hall and entertainment space into the former HBC location at Oakville Place, west of Toronto, by early 2027.

At the Shops at Pickering City Centre, Splitsville Bowl is due to move into the ex-Saks Off Fifth space by fall 2026 — and the company's managing director hinted that might not be the last Saks it takes over.

"We've got a number of different opportunities that we're currently looking at across Canada where previous Saks and Hudson Bay's sites have been that we've been offered by landlords," Andy Johnson said. "Hopefully, we can make some of those work."

JLL has predicted 65 per cent of HBC's vacant retail space will be committed to new retail tenants within two years but says the majority of the units will take multiple tenants to fill. Twenty-two per cent will likely be redeveloped, perhaps into the condos, offices and community hubs landlords mused about while fighting Liu's push to move into their properties.

One of the most dramatic reimaginings could come in Montreal. Cree organization the James Bay Eeyou Corp. and real estate developer JHD Immobilier want to spend nearly $400 million turning HBC's former Ste-Catherine Street store into a fur trade museum, Indigenous cultural centre and a hotel complex opening by 2029.

"We see this project as a way to give the building new life while preserving its soul," said Henry Gull, president of the James Bay Eeyou Corporation, in a September statement.

Townsend feels the same about Sabayons. In fact, its name is a blend of the retailers — Saba Bros., Eaton's and The Bay — operating on the Bay Centre land before his store.

He's not aiming to recreate those businesses, but he's proud he re-energized their former home so much that he recently had to take a 28-day buying trip to Europe to scoop up enough product to satiate demand.

While he doesn't imagine opening more Sabayons stores in former HBC properties, he's not completely ruling out opening another store under a different name by his East Coast shipping hub.

"For logistics it would make a lot of sense to have a representation out on that side of the country, but definitely nothing in the near future," Townsend said.

This report by The Canadian Press was first published March 6, 2026.