I disagree that deciding the fate of historic buildings is, or should be, a purely market-driven process. The reality is that each time this kind of project comes along, the ideal solution is one where the demands of the market are balanced with the value of the building as a historic property. A good example of this process is Old City Hall. Eaton's intially claimed that what would become the Eaton Centre could not possibly succeed without tearing down Old City Hall, leaving just the tower. However, public outcry saved the building, and subsequently the mall has done just fine without the land it would have gained. So the market alone does not--and I would argue should not--drive the decision as to what should be done with this kind of property.
Obviously, this is a different scenario than Old City Hall--it's not centrally located, and it was always a warehouse on the edge of downtown, not the symbolic heart of the city. Loblaws clearly has some interest in the historic value of its building and recognizes its worth, but doesn't think the interior bears preserving. They might have the right mix here, although without a better understanding of what the interior currently looks like and what it would actually cost to make it usable, it's difficult to say for sure. Reuse is not always possible in every case, but I do like to see due diligence rather than outright dismissal. Did they provide any sense of what it would have cost to adapt the building rather than gutting it?