A new made-in-Canada retail brand created to backfill premises vacated by Bed Bath & Beyond Canada has defaulted on its lease obligations.
Rumours of trouble at rooms + spaces began spreading out of head offices in Ontario two weeks ago. By early December, following Black Friday sales and four months after the stores’ initial opening, lawyers had moved in.
A letter dated Dec. 6 from Lawson Lundell LLP at the entrance of the Vancouver store at 1740 West Broadway gave notice to quit the premises, with a bailiff’s letter setting a deadline of Dec. 15.
A notice attached to the letter advised that the landlord, West Broadway Centre Ltd., was taking action on account of the “breach or non-observance or non-performance of the covenants, agreements, provisos or conditions of the lease … in particular, the non-payment of Rent.”
The lawyer’s letter reminded rooms + spaces that it had been in default of its lease obligations since Oct. 31, and had received a notice of termination Nov. 28.
The letter was addressed to Doug Putnam and Jesse Gardner of Putnam Investments in Ancaster, Ontario, which through DKB Capital assumed the Bed Bath & Beyond leases via a court order in April.
According to industry sources, the other locations occupied by rooms + spaces – which hoped to have 24 across Canada this fall – could face similar proceedings.
Lawson Lundell did not immediately respond to a request for comment. Gardner did not respond an e-mail from Western Investor, while an e-mail to rooms + spaces president Greg Dyer, former general manager of Bed Bath & Beyond Canada, bounced back.
Dyer told Western Investor in August that rooms + spaces offered a distinctly Canadian take on Bed Bath & Beyond’s offerings. He was keen on growth, sand said approximately 85 per cent of merchandise would be sourced from Canada.
However, a glance at product tags in the near-empty West Broadway store this fall showed that even if products were designed or sourced within Canada, many were manufactured offshore. Products made entirely in Canada typically bore premium prices in contrast to those made offshore.
The massive 39,208-square-foot premises on West Broadway will be tough to fill. Prior to Bed Bath & Beyond, Future Shop occupied the premises. It has long been a mid-box space of the sort increasingly difficult to fill as sales for mass market items such as homewares have moved online.
Yet space remains in demand for certain uses, such as gyms and experiential retail. Speaking in August, JLL Canada vice-president, retail, Trevor Thomas said the closure of Bed Bath & Beyond created an opportunity to acquire the space in an under-retailed market.
“With the news of Bed Bath & Beyond exiting Canada, it was a rare opportunity for rooms + spaces to take advantage of the real estate that was coming back to the market and they seized the opportunity in the tightest markets,” he said.
The opportunity now looks set to be claimed by another entity.