Sears Holdings Corporation, the company that runs Sears and Kmart, has a problem. They have a lot of real estate, and not enough sales to keep all of that real estate busy. One solution is to close stores as they underperform or as their leases expire, which is what the company has been doing. Another solution? Rent out that space. For the right customer, virtually every Sears and Kmart store is up for grabs.
Not the whole stores, of course. While there are a few closed buildings available to anyone interested in opening their own big box, most space available is inside Sears or Kmart stores that are already operating and plan to stay in business after you move in. It’s the retail equivalent of renting out your spare bedroom or in-law apartment for extra cash.
Every store, really?Image courtesy of Nicholas Eckhart
It doesn’t take extensive retail experience to figure out what’s going on here. Sears Holdings owns a lot of buildings, and they hold long-term leases on a lot more. They’re not doing enough business to fill all of that space with merchandise and employees. In a press release from earlier this year, a Sears executive said this about a deal signed with Dick’s Sporting Goods:
“We have executed a number of these transactions that serve as an additional revenue stream, drive efficiency in our store operations and bring in increased customer traffic.”
Demised SpaceImage courtesy of Sears Holdings
Want to rent some space next to a Kmart store? How about some empty space inside a Sears store? Maybe you’d be interested in a Sears Automotive building out in the parking lot. All of that and more is available at Sears Holdings Realty.
What would this look like in practice? There are a few examples of subdivided Searses already up and operating. While the Whole Foods store that opened in Albany, NY earlier this month inspired this post, there are plenty of other examples in the Whole Foods chain alone. The first was in Colorado, and there are also Whole Foods stores carved out of Sears anchors in Greensboro, North Carolina, and in Clearwater, Florida.
There are other examples, too: at the King of Prussia Mall near Philadelphia, Dick’s Sporting Goods agreed to be roommates with Sears, subleasing part of the 215,000-foot anchor store’s second story. “This project will bring more energy and activity to this area of the mall, where customers will also find easy access to restaurants and other dining choices,” an executive with Simon, the mall’s owner, said at the time. Translation: the mall’s customers hadn’t yet figured out that there’s always parking at Sears.
Out of curiosity, we checked the Sears store directory against the Sears Holdings Realty site listings for the state of New York. Every Sears store has space up for grabs, and Auto centers that are attached to buildings or detached are available as well. (Would a car-related business open up in a spot so closely associated with the Sears brand? Guess we’ll find out.)
Go ahead and check the listings yourself: surely there are Sears and Kmart stores in your market, and surely they’re up for rent unless their leases explicitly prohibit subleases. Filter by state or by market. There you will find every Sears-owned store, open for non-Sears business.
Their plan all alongImage courtesy of Brian Sozzi
It’s possible, of course, that Sears will be much better at being a landlord than it currently is at being a retailer. Having less space to fill will certainly cut back on sad empty shelves and spaces filled with random junk that some Sears stores are currently filled with.
Analysis from last fall by The Motley Fool points out that if this was Sears’ plan all along, maybe they were wise not to spend cash on a JCPenney-style extreme makeover: if parts of those stores were going to be redeveloped for other retailers anyway, why bother?