Real estate services and investment firm CBRE has released a report on the potential impact of Sears Holdings Corp.’s bankruptcy filing and announced store closures on the U.S. retail real estate market.
Highlights of the report include:
• A breakdown of Sears stores by class of mall.
• Information on why ESL Investments’ initial bid for “a large portion” of Sears’ stores will likely be required to go through an auction process.
• Ramifications of Sears closures for co-tenancy, or “kickout” clauses, are anticipated to be minimal.
• Possibilities for replacement tenants include clusters of retailers or restaurants, apartments, hotels, entertainment venues, and nontraditional mall retailers such as grocers, health-care providers, and educational users.
“While this event long has been anticipated, backfilling department-store real estate always is challenging,” says Melina Cordero, global head of retail research for CBRE. “Sears’ bankruptcy will hasten the evolution of many malls into centers with a bit less retail but more of other uses such as apartments, hotels, restaurants, offices, distribution and entertainment.”
“This repositioning process will be a lengthy one for many malls,” adds Mark Hunter, CBRE’s managing director of retail asset services. “First, owners or buyers of these sites must wait for a complex and likely long bankruptcy process to play out. Thereafter, it can take up to three years to secure a new retailer for these types of spaces, reformat the box and get that new retailer or retailers established therein. There is a new future for these store sites, but achieving it will require investment and patience.”
To read the full report, click here.