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Closures turn sites into shells

Uncertain futures for buildings

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Sturgeon Creek Safeway

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Sturgeon Creek Safeway Photo Store

With the looming closure of three more suburban grocery stores, Winnipeg is facing a glut of outdated, oddly sized and orphaned retail space.

Those include stand-alone stores still with their 1960s stylings, such as the Safeway on Ness Avenue slated to be closed this fall, and big Zellers stores that have been closed for a year and have dragged down already-struggling suburban malls such as Fort Richmond Plaza and Northgate Shopping Centre.

But, Ken Yee, senior vice-president at Cushman & Wakefield, said the property jockeying that's about to begin anew could represent a real opportunity for landowners to revamp their sites, renovate buildings and increase lease rates. And the vacancies could allow a new generation of businesses such as ethnic-food stores such as Young's or gym chains such as GoodLife Fitness to expand.

"These stores have been in the market a long time," said Yee of the grocery locations. "I wouldn't be surprised if landlords are happy to see change."

Some of the casualties of the recent retail turmoil could spark more innovative infill development. Yee said the current vision for the vacant Zellers at the Northgate mall includes a mixed-use project combining ground-floor retail with residential units above.

On Thursday, Sobeys confirmed the closure of three Winnipeg Safeway and IGA stores, part of another wave of restructuring following the $5.8-billion sale of the Safeway chain to Sobeys last year. Closing this fall are the Safeway stores in Sturgeon Creek and Garden City as well as the IGA in the Maples.

Safeway spokesman John Graham said the stores were consistent underperformers and would have cost a lot to revamp.

Safeway stores in Steinbach and Brandon are also closing. More than 300 unionized workers will be affected. The company says it's likely the majority will be able to move into jobs in other stores.

The fate of the three Winnipeg properties could take months to shake out. Two haven't seen a significant redesign in decades, and all three are too small for a modern big-box grocery store and tricky to split into smaller shops without creating a bowling-alley effect.

They could linger in limbo like the Safeway on Wall Street and Ellice Avenue, one of the classic 1960s models. It stood vacant for nearly six years despite an exterior facelift. Habitat for Humanity's ReStore finally opened there earlier this month.

Jamie McPetrie, a senior associate at Avison Young, said the soon-to-be-closed IGA is the anchor tenant of the Maples Marketplace, a strip mall that is fully leased. He said there are some logical tenants for the 26,000-square-foot space but competition for tenants will be tough.

"It will have an impact," said McPetrie of the looming vacancies. "The few users out there looking will have options."

But unlike office space, retail has more tolerance for expansion, he said. The explosion of new big-box retail sites opening in the city's south end in recent years demonstrates that.

Thursday's store-closure announcement comes about a month after four other Winnipeg Safeway stores were bought by Co-op and reopened as that company's first real foray into Winnipeg's grocery market.

The jockeying in the grocery industry follows the demise of the Zellers brand across Canada. Many Zellers stores were taken over by Target when the low-cost American retailer moved into Canada last year. But, in Winnipeg, two Zellers stores remain mothballed, in part because they're difficult to subdivide and often too big for most retailers.

Yee said the solution to the Northgate Zellers is likely to demolish it and build a mixed-use infill project with a food store on the main floor and housing geared toward retirees or seniors above. Much of the rest of Northgate mall would remain intact, part of the amenities that would make apartments or condos attractive for residents.

Plans are preliminary and a zoning change would likely be necessary, but work could begin next year, said Yee.

Another potential bright spot is the former Fort Richmond Safeway, located in an aging mall on Pembina Highway. The store closed earlier this month, not because the store wasn't profitable, said company officials, but because the property owner declined to renew the lease.

Instead, says a zoning-variance application approved by the board of adjustment in March, the old Safeway is slated to become a Sobeys-owned grocery store again, but with an expanded footprint.

It's not clear when construction might begin or what may happen with the large Zellers store on the same site. Officials from Shindico and Sobeys refused to comment.

maryagnes.welch@freepress.mb.ca

Republished from the Winnipeg Free Press print edition June 27, 2014 A11

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