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Canadian malls are shifting from retail hubs to mixed‑use community centres, blending housing, offices, services, and experiences to drive daily foot traffic.
After more than 355 years in business, Hudson’s Bay (The Bay) shuttered its remaining stores in 2025, ending a retail legacy that once anchored malls across Canada.
The collapse of The Bay wasn’t just the failure of a single department store—it exposed a deeper structural shift underway in the Canadian retail sector.
For decades, shopping malls were built around large department stores that generated foot traffic and supported dozens of smaller retailers. As e-commerce accelerated and economic pressures reshaped consumer spending, that traditional model began to break down.
Today, the prime retail spaces left behind by the likes of The Bay, as well as Nordstrom and Saks Fifth Avenue, represent one of the most complex retail real estate challenges facing Canadian cities. Across the country, developers, mall owners, and municipalities are asking the same question: what comes next?
The answer may redefine the role of malls in Canada over the next decade.
Canada’s retail sector has proven more resilient than many expected.
Retail availability across major cities remains low, suggesting continued demand for well-located retail space. However, not all formats are performing equally.
Enclosed malls—particularly those heavily dependent on fashion retailers—have been slower to recover from pandemic disruptions and shifting consumer behaviours. Meanwhile, neighbourhood shopping centres and open-air retail strips have rebounded as consumers prioritize convenience and proximity.
To understand where malls are going, it helps to revisit how they evolved.
Canada’s mall boom began in the mid-1900s, when suburban expansion and rising car ownership fueled the development of shopping centres. These malls were designed around department store anchors like The Bay, Eaton’s, and later Sears.
A typical mall included:
For decades, this model thrived. Malls became both retail hubs and social gathering spaces.
However, the decline of department stores has been unfolding for years. Eaton’s collapsed in 1999, Sears Canada followed in 2017, and the closure of The Bay in 2025 marked the end of the traditional Canadian department store era.
The closure of The Bay left behind one of the largest concentrations of vacant retail space in Canadian history.
More than 70 former The Bay and Saks locations suddenly became empty, representing millions of square feet of retail space across the country.
The scale of these stores presents a major challenge. While the average Canadian mall tenant occupies roughly 3,700 square feet, former department stores often exceed 150,000 square feet. Few modern retailers need that much space.
As a result, landlords and developers must rethink not just tenants, but the purpose of these properties altogether.
Department stores once served as the gravitational centre of malls, drawing customers who then shopped at smaller stores. Today’s retail ecosystem is far more fragmented.
Malls are now anchored by:
Large single-tenant retail spaces are increasingly difficult to lease, pushing landlords toward subdivision and reconfiguration strategies.
Many former department stores are now being subdivided into multiple smaller units, allowing malls to attract a wider mix of tenants.
Increasingly, the answer isn’t more retail spaces—but more reasons to be there.
The emerging model for Canadian malls is the “retail destination”: a mixed-use environment where shopping is only one component of a larger ecosystem that includes residential, office, entertainment, and community uses.
This shift reflects a core change in how consumers interact with physical space. People are no longer willing to travel solely to shop. They will travel—and spend time—where shopping is integrated into daily life, work, services, and social activity.
By integrating offices, housing, healthcare, education, and public amenities directly into mall sites, developers create a built-in customer base that generates foot traffic throughout the week, not just during peak retail hours.
Across Canada, mall owners are already experimenting with new uses for former anchor spaces. Early reinvention strategies include:
In many cases, former department store footprints are being redeveloped vertically—adding residential towers or office space above a reconfigured retail base—allowing landlords to maximize land value while reducing reliance on large-format retail tenants.
The Oakridge Park redevelopment will transform the former Oakridge Centre into a mixed-use district featuring:
Rather than functioning as a traditional mall, the site is being reimagined as a complete urban neighbourhood. Retail now acts as the connective tissue between where people live, work, and gather.
Around Square One Shopping Centre, developers are building Square One District, a multi-decade project that will include approximately 18,000 residential units, parks, and office space.
The mall remains operational but is gradually becoming the centre of a dense urban district.
As population density increases around the mall, retail benefits from built-in demand driven by residents and office workers, reducing dependence on destination shopping alone.
Other malls are pursuing a different strategy: focusing on luxury retail.
Yorkdale Shopping Centre has evolved into one of Canada’s premier luxury shopping destinations. Its success demonstrates that top-tier malls can still thrive by offering curated, high-end retail experiences.
However, Yorkdale’s success also reflects its ability to curate scarcity, experience, and brand prestige—advantages not available to most malls.
For retailers looking to enter—or expand within—the market, the decline of the department store anchor fundamentally reshapes how mall opportunities should be evaluated.
Mixed-use malls offer something department stores once did: guaranteed traffic. But instead of drawing customers a few times a month, residential and office components create daily, repeat visits. The most resilient retail concepts moving forward will be those that serve everyday needs, provide experiences that cannot be replicated online, or integrate seamlessly into consumers’ daily routines.
Retail is no longer the destination—it’s part of the destination.
For years, headlines have predicted the death of the mall. In reality, malls aren’t disappearing—they’re reinventing themselves.
The closure of The Bay didn’t simply remove a retailer; it removed the final pillar of a retail model built around large department store anchors.
What replaces those anchors will shape the next generation of Canadian retail. And in many cases, the mall of the future may look less like a shopping centre—and more like the centre of a community.
From Nordstrom’s departure from the Canadian market to the liquidation of most Hudson’s Bay stores, many are left wondering if there’s an underlying weakness in the retail market. To some degree, the public attention paid to these departures overstates their importance to the retail sector. What these stories actually reveal is not weakness, but a retail landscape in a state of change that’s unlikely to stop anytime soon.
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