Former Sobeys site in limbo after company pledges to not enforce property controls

A shuttered property in Brandon that used to be home to a Sobeys store could remain closed for years despite the company saying it won’t enforce property controls and new provincial legislation removing them for supermarkets.

A lawyer for the company that owns the building said Sobeys’ lease remains in effect and the food retail giant is paying rent on the property at 1645 18th St., which has sat vacant since Sobeys moved to a new location across the street in 2017.

“As long as they have a lease and they’re paying rent, Sobeys is entitled to stay there,” said Shindico general counsel Justin Zarnowski.

“They can kind of do whatever they want with the property, regardless of the property controls.”

Provincial legislation that came into effect last year bans new property controls from being created and voids existing controls unless the holder of the property controls registers for an exemption. The registration can be removed if the Municipal Board determines the property control is contrary to the public’s interest.

Sobeys’ parent company, Empire Company Ltd., announced on July 21 that it will not be enforcing restrictive covenants or exclusivity clauses, nor entering into new ones.

The restrictions have allowed companies to prevent competing stores from opening in specific locations.

Empire didn’t respond to multiple requests for comment over a two-week span.

Manitoba Public Service Delivery Minister Mintu Sandhu told the Sun on Wednesday that the company’s announcement was a step in the right direction, but it needs to actually drop its property controls, instead of saying it won’t enforce them.

The province has taken four Sobeys locations to the Municipal Board for review, including the Brandon location.

“They will decide and see if they are in the best interest of Manitobans to keep those property controls,” Sandhu said.

In total, Sandhu said Sobeys has 43 property controls in Manitoba.

“My hope is once the Municipal (Board) decided, ‘Hey, you know what, this is not in the best interest of Manitobans to have those property controls,’ my hope is that Sobeys realizes, ‘You know what, we have to do better,’ and my hope is they will just drop those property controls themselves,” said Sandhu, the MLA for The Maples.

When asked about the lease on the Brandon location, Sandhu said the province “cannot do everything.”

“But there’s certain things that are in our control, and that is getting rid of those property controls and bringing more competition into the market,” he said.

Property controls in other areas, he said, work differently. In Steinbach, the company has property controls on empty land where another store can’t be built, despite Sobeys only operating one store in that city.

“Having those controls is preventing the real competition coming into the market,” Sandhu said.

He said the legislation, which was introduced because of the Brandon location, has had a positive effect, as more than 20 property controls from other companies are gone.

Glen Simard, the MLA for Brandon East, who had proposed the legislation that passed last year, said he wants the company to remove the controls completely rather than just announcing they won’t be enforced.

“I think actions speak louder than words, and when those property controls are removed and other competition goes into that space, I would say that is the step in the proper direction,” Simard said on Tuesday.

He said corporations have a duty to citizens that a major retail space meant for a grocery store is actually used for its intended purpose.

“That’s a store that I used to shop at, and I can’t shop there anymore,” Simard said. “If we put another grocery store across the street from the Sobeys, maybe they’ll compete for pricing and compete for business. And I think when that happens, the consumer benefits.”

He said people are having to stretch their paycheques and this is one way the government is taking action.

“Let’s get a new grocery store open on that site as soon as possible. That would be a victory for me,” Simard said.

Sobeys renewed its lease on the Brandon property in 2023 and it runs until Oct. 31, 2028.

In 2019, Shindico president and CEO Sandy Shindleman told the Sun that his company was looking to help Sobeys find a company to sublease the almost 4,000-square-metre building, but that the chain was unwilling to have a competing grocery business occupy the space.

Zarnowski said Shindico really likes the site, and that long-term, the property will be “successful.”

“We have a lot of conviction here that something is going to make sense, and that ultimately, whether it’s (Sobeys) renewing the lease and doing something different, or leaving and us putting somebody else in there … we’ll see something exciting happen in the future. We just we just don’t have anything quite yet.”

Zarnowski said Sobeys has options to renew the lease at the shuttered location “for what feels like forever.”

“It won’t be necessarily a 2028 resolution, but like I said, it’s such a great site that we really do think that some something should and ultimately will happen here,” he said.

“It’s just the type of site that we wouldn’t have expected to sit this long.”

» alambert@brandonsun.com