The most frightening thing for a commercial real estate company is a large, empty unit it's dying to fill, lest it be haunted by the vacancy for months or years to come.
This Halloween, that fear is a reality because of the collapse of Canada's oldest company. Hudson's Bay closed all of its stores earlier this year, leaving landlords for 25 of its former department stores tied up in a court drama and many more in search of new tenants willing to take over hundreds of thousands of square feet.
But a few have found some reprieve: Spirit Halloween.
The popular U.S. costume and decor shop moved into some former Bay locations and others previously held by Sears, Peavey Mart, Bed Bath & Beyond and Decathlon just in time for spooky season. It will deliver a few months' rent to landlords and plenty of foot traffic before disappearing shortly after the holiday ends.
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Short-term commercial rentals have long been used by holiday-centric companies and promoters of films, concerts and other consumer products. However, it has caught more attention lately because of the prized spaces that have been on offer, even as the retail real estate market has rebounded from the COVID-19 pandemic.
"Short-term tenants are not a new thing. We're just seeing it being done in prominent locations," explained Kate Camenzuli, vice-president of retail at commercial real estate company CBRE.
Huge spaces in the country's most desirable malls and shopping districts would seldom have been accessible for short-term tenants like Spirit Halloween or Calendar Club in the past.
Yet they've become more available in the last decade because so many big-box tenants have disappeared. Those left — grocery stores, Costco, Canadian Tire, Walmart, Ikea, Simons and Holt Renfrew — have been expanding but aren't necessarily gobbling up all the vacated spaces.
"Backfilling all of the department stores with other department stores is a thing of the past," Camenzuli said.
That's why some landlords have settled for more unusual tenants: pickleball courts, roller rinks, food halls and even apartments.
But the bulk of prospective retail tenants don't want anywhere near that much square footage.
"There is an extraordinarily high amount of demand in a box, I'd say, anywhere from 6,000 or 7,000 square feet down," Camenzuli said.
That's contributing to a national retail vacancy rate at real estate investment trusts that CBRE said has been hovering around 4.2 per cent.
Meanwhile, real estate firm JLL reported last month that retail availability rates are below historical levels, and Toronto and Montreal have reached new lows, but there are signs of the market softening. For example, rental growth has fallen below the historical average.
"Where you start to run into some potential challenges is above that, like, 15,000 square foot box," said Camenzuli. "There's opportunities, but they come at quite a high cost for the landlord."
Either major concessions have to be made to fill them or landlords have to spend "a fortune" to split a huge property into smaller units, she said.
If the unit sits empty while they decide which route to take, they lose rent, foot traffic and often relevance.
Spirit Halloween, however, is a win-win.
Its short-term leases mean the retailer, which declined to comment for this story, saves overhead from not having to run a costly real estate empire year-round. Meanwhile, landlords get a tenant that will fill their biggest — and often most challenging — gaps until a long-term occupant comes along.
"They're a nice compliment to our business because we benefit from them, they benefit from us," said Alex Avery, chief executive of Primaris Real Estate Investment Trust, which owns the Cataraqui Centre in Kingston, Ont., where Spirit Halloween has currently moved in.
His company had nine properties used by Hudson's Bay. Four are covered by leases the department store wants to sell to B.C. billionaire Ruby Liu. Landlords, including Primaris, are fighting the move because they see Liu as unfit to launch a new retailer in their properties.
The remaining five — Cataraqui Centre and Place d’Orleans Shopping Centre in Ontario, Les Galeries de la Capitale in Quebec, and Medicine Hat Mall and Sunridge Mall in Alberta — were turned back over to Primaris recently.
The five sites span 532,100 square feet and will result in a $5.5 million hit to the annualized revenue of Primaris, which estimates it will cost between $50 million and $60 million to repurpose and redevelop the sites.
In the interim, shoppers can look forward to Spirit Halloween, Santa photo booths and holiday or movie pop-ups plugging the holes.
When Primaris' spaces are ready for a long-term tenant, Avery doesn't expect to have a hard time finding takers.
"There is an awful lot of demand and very limited new supply, so what vacancy does exist is quickly disappearing," Avery said.
The situation should spook Spirit Halloween.
"I would imagine in two years' time, they'll have a much harder time finding space than they do today," Avery said.
This report by The Canadian Press was first published Oct. 12, 2025.
