By Steve Macleod
At the end of Blockbuster Canada’s 21-year run in September 2011, more than 400 retail locations across the country began preparing for the next act. As operations for the video and game rental company wound down, about two million square feet of retail space was added to the Canadian market. It left investors, landlords and tenants contemplating the impact it would have on the retail real estate market.
Early reports indicated the properties would be snatched up, given Canada’s shortage of retail space, but finding new tenants for the former Blockbuster locations has challenges.
In a market review, Barclay Street Real Estate Ltd. says the unusual size of Blockbuster locations – typically 5,000 to 6,000 square feet – is too large for most retail operators, but too small for bar or restaurant tenants who typically look for 10,000 square feet or more.
Barclay Street says one solution could be transforming the locations into two or more retail outlets. While it would be a costly renovation for landlords, reducing the size of a store to 1,500 – 3,000 square feet could make the space more appealing to a broader range of tenants.
The original size of Blockbuster locations could work for a fitness centre – as these brothers from Winnipeg realized – or a yoga studio. In Calgary, former Blockbuster locations on 17th Avenue SW have been converted into a Servus Credit Union and a Sleep Country.
Barclay Street also points out that two million square feet of retail space seems substantial at first, but it’s just a small percentage of the retail inventory across Canada. The Calgary market alone consists of about 37 million square feet of retail space, with more than 10 million square feet of new development in the pipeline.