Gary Dinges/Austin-American Statesman – With sales continuing to sag, struggling retailer Sears is trying to bring in extra cash by leasing out large chunks of its stores to other retailers, such as Austin-based Whole Foods Market.
In Austin, Sears is currently offering up half the space at two of its stores – if the price is right – through Seritage Growth Properties, an affiliated real estate investment trust.
In total, Seritage is overseeing 266 properties accounting for about 42 million square feet of space across the country.
At the Sears store at Barton Creek Square mall, 2901 S. Capital of Texas Highway (Loop 360), Seritage is marketing 82,280 square feet of retail space for lease, as well as the 20,800-square-foot auto service center.
The 165,765-square-foot store, which was built in 1980, according to the Travis Central Appraisal District, is valued at $12.2 million this year.
The Barton Creek Square space is being listed as part of a partnership with Indianapolis, Ind.-based Simon Property Group, the mall’s owner.
Simon declined to comment; Seritage didn’t respond to a message from the American-Statesman seeking additional details.
In North Austin, 83,630 square feet of retail space plus the 10,320-square-foot auto center are up for grabs at the city’s only Sears Grand store, 12625 N. Interstate 35.
The 173,301-square-foot store was built in 2004 and is valued at $20.3 million by the appraisal district.
The Sears stores at Lakeline Mall and Hancock Center aren’t, at present, on the list of stores where Seritage is offering space.
In a number of other cities, Sears and its corporate sibling Kmart have already handed over retail space to several well-known chains. In addition to Whole Foods, they include At Home, Burlington, Dave & Buster’s, Floor & Décor, HomeGoods, Marshall’s, Michaels, Nordstrom Rack, PetSmart, Planet Fitness, Ross, Saks Off 5th, TJ Maxx and Total Wine & More.
Many of the Sears and Kmart auto centers have been transformed into other uses, such as restaurants. BJ’s Brewhouse, Outback Steakhouse, Shake Shack and Yard House have all leased auto center spaces around the U.S., according to Seritage’s securities filings.
The fact that Sears is looking to cash in on its real estate isn’t surprising, according to retail consultant Jeff Green.
“I’ve seen this work in a lot of places,” said Green, president and CEO of Jeff Green Partners. “Sears, first and foremost, is a real estate company more than a retail operator because they own a lot of real estate and it’s worth a lot of money. The preferred thing for them to do right now is sublease space.”
In some cases, Green said Sears is even shutting down stores completely and turning the land over to multifamily developers.
While rumors of Sears and Kmart going bankrupt and shutting down have been swirling for years now, Green said he doesn’t see that happening just yet – thanks, in part, to the company’s reliance on its real estate.
“I don’t believe that. We’ve been hearing it for so long,” he said. “But, when your retail business is down 10 percent every quarter, you can’t continue for very long. They’re going to have to think of even more creative ways.”