“I think it’s going to present opportunities,” says Neil H. Warshafsky, CCIM, a broker with Royal LePage Commercial. “But it’s a double-edged sword.”
While Target’s exit threatens to leave terminal vacancies in smaller communities, Warshafsky says areas already undergoing gentrification might be best served by a new type of development.
“It’ll depend on the location,” Warshafsky explains, “but I read that Target will buy out the leases, so landlords will get the money upfront and [those landlords] might end up repositioning some of these properties.”
Some property owners might opt to re-lease the space at a higher rent or – better yet – they could demolish the structure, apply for the appropriate re-zoning and rebuild something with more value in a burgeoning neighbourhood.
That’s a particularly attractive option for properties located in major cities, where demand for housing close to amenities remains in short supply.
The neighbourhood around Square One mall in Mississauga, Ont., for example, is proof that the marriage of several types of properties can make for a vibrant community. The area is already home to a diverse series of residential condominiums, office buildings and retail stores, with even more development continuing.
“There are probably some [former Target] locations – around a lot of these mega shopping centres, that are more transit oriented,” Warshafsky says. “So they’re on the subway, and there’s a lot of growth.
“There will be opportunity for these landlords to demolish and put up a condo with retail below it.”
Commercial agents, have your say: What should landlords do with former Target spaces?
The doomsayers were out in full force last week when Target announced plans to close up shop in our fair country, but some commercial brokers say the retail giant’s exit could be great news.