Update: This article has been updated with new information that the Hudson’s Bay Co. civil case has been dismissed.
Hudson’s Bay Co.’s case to stop a massive construction project underway at the Metropolis at Metrotown parking lot outside its doors has been dismissed by the consent of all parties.
Construction on the three-tower development, which began in January of this year, will continue as scheduled.
Construction a ‘significant detriment’
In documents filed in B.C. Supreme Court, Hudson’s Bay (HBC) said the construction at the mall’s northeastern section by the intersection of Kingsway and Nelson Avenue was a “substantial interference” and “significant detriment” to its operations at Metrotown and created the false impression that the HBC store is closed.
The company said its brand visibility was impaired because its “large HBC sign is partially obscured by large cranes which is diminishing the impression that the sign makes.”
The retail company said the construction would “irreparably modify” the business’ retail character and resulted in “immediate and long-term decline in sales and customer traffic that will be impossible to quantify.”
The retail company said it is “highly selective” in where it leases its store space, choosing “first-class shopping centres.”
The retailer filed for an injunction to stop the construction in June.
“Faced with an uncooperative landlord, and a developer determined to build without regard for HBC’s rights, the only recourse was this proceeding,” HBC said.
Concord Metrotown tower development
The development at Metrotown, developed by Concord Metrotown, includes three residential towers on a podium with underground parking. More than 1,300 housing units are planned.
Construction on the project began in January of this year.
The developer said it has invested about $236 million into Phase 1 and has approved $340 million in construction contracts over the next four years.
Concord said if the injunction had gone ahead, it would “throw into chaos a large, very expensive construction project.” It said the development will result in thousands of new shoppers living close to the HBC store and would likely benefit HBC financially over the long term.
Ivanhoe Cambridge, which owns the Metrotown mall, also said the injunction should be dismissed as Concord’s construction is underway and the parking lot already demolished.
If the injunction had been granted, any harm to HBC would have continued as the relevant land is currently an unfinished construction site and “a partially excavated pit,” according to Ivanhoe.
The Hudson’s Bay lease
HBC sued Concord and its subsidiaries, as well as Ivanhoe, and sought an injunction against construction, declarations that its lease was breached and that HBC had an equitable interest in a part of the land currently under development by Concord.
HBC said its lease with Ivanhoe restricted development in a certain area of land — the “no-build zone” — that was formerly owned by Sears Canada before it was purchased by Concord in 2015.
In 2015, HBC and Ivanhoe amended the lease to attach certain conditions to allow development on the Sears land. The conditions included that Ivanhoe settle a lawsuit with Concord over the development of the Sears land and notify HBC of the settlement.
HBC said those conditions weren’t met and that Ivanhoe and Concord breached the lease by beginning construction on the Sears land.
“It is apparent that Ivanhoe subsequently reached a beneficial arrangement for itself with Concord, turned its back on HBC and permitted Concord to redevelop,” HBC stated.
Response from Metrotown’s owner and developer
But Ivanhoe said it advised HBC in 2019 of its settlement with Concord that terminated any agreement to restrict the development of the Sears land, and HBC did not express any concerns until it brought the suit forward in May 2022.
Ivanhoe also said, in March 2022, HBC requested Ivanhoe waive the remaining lease amendment conditions in exchange for a $16.5 million payment to HBC for tenant allowance, which Ivanhoe agreed to.
Ivanhoe said this agreement showed HBC “expressly contemplated” the cost associated with any interference as a result of construction.
The mall owner said it provided HBC with “repeated and substantial notice” about the beginning of Phase 1 construction over a period of three years, including through signage and formal notices, as well as “obvious” construction preparations which began two months before material civil work began in January.
Ivanhoe also said any losses HBC experienced resulting from construction could be quantified by metrics like changes in traffic and sales, and not “impossible to measure” as HBC said.
Meanwhile, Concord said it was never beholden to an agreement restricting development of the Sears land because of the 2018 settlement with Ivanhoe.
The 2015 lawsuit between Concord and Ivanhoe was “on the very issue” of whether Ivanhoe could restrict Concord from developing on the Sears land, and it was dismissed by consent.
HBC has leased space at Metrotown mall since 1990 and has 60 years left on its lease.
Concord said construction of Phase 1 is scheduled for completion in spring 2026.
The suit was dismissed by consent of all parties before the court case could commence.