Struggling to sell goods, Sears now markets a valuable asset: real estate
Shoppers may no longer come in droves for wrenches, watches or washing machines. But Sears, the once-ubiquitous department store that has been battered by the growth of e-commerce, may have one last thing of value to market: its own buildings.
Starting about a decade ago — and accelerating over the past few months as its owner embarked on the equivalent of a clearance sale — investors have been betting on new uses for vacant Sears stores, from Santa Monica, California, to southern New Jersey.
Many of the sites, often older, windowless hulks connected to shopping malls, are not straying far from their original mission: They’re being overhauled for new retailers.
But some addresses, in line with a trend of repurposing dusty commercial properties, are being given fresh and sometimes unexpected new functions. At more than a dozen sites across the county, developers are installing high-end apartments, cutting-edge classrooms and even labs where classified weapons systems are conceived.
“Sears seemed to have thrown in the towel a long time ago and is now figuring out how to monetize its properties,” said Joseph F. Coradino, the CEO of PREIT, a Philadelphia-based shopping center owner that has redeveloped about a halfdozen Sears stores. Most recently, a health care facility announced it was taking over a shell at his Moorestown Mall in New Jersey.
To be sure, Sears is not the only chain grappling with empty aisles. Several major department stores have filed for bankruptcy protection during the pandemic, including Neiman Marcus, JCPenney and Lord & Taylor, though as with Sears, many of those retailers were struggling and closing locations well before the coronavirus crisis.
For Sears, the segue to new uses is perhaps most pronounced in its hometown, Chicago, where for decades the tallest building was Sears Tower. But no more. Sears moved out long ago, and since 2009 the 1,450-foot black-toned skyscraper has been called Willis Tower, for a British insurance company.
In Chicago, several stores have recently completed or are about to embark on makeovers, including one of Sears’ oldest properties, at East 79th Street and South Kenwood Avenue, which opened in 1928 and sold its last sewing machines in 2013.
After all traces of Sears were scrubbed away, the buff brick, nearly block-long structure reopened in 2020 as a self-storage facility operated by ExtraSpace Storage.
“I remember the cosmetics counter right inside the front door,” said Zeb McLaurin, recalling trips he made there with his family in the early 1980s. Today, McLaurin, the president of McLaurin Development Partners, is a co-owner of the 140,000-square-foot building, which he bought in 2018 for $900,000. The seller was Seritage Growth Properties, a real estate investment trust and an offshoot of ESL Investments, which has owned Sears since 2005 and controls Kmart as well. Sears filed for bankruptcy in 2018; its assets were snapped up a year later by Transformco, another ESL-controlled entity. Only a handful of Sears stores remain open.
With the opening of that Chicago store nearly 100 years ago, Sears began a nationwide push to add a brick-and-mortar component to a thriving mail-order business. Attention was paid to make its stores look similar but also stand out.
Indeed, a tall central campanile-style tower with arched windows at the East 79th store resembles one in the North Lawndale neighborhood that once lorded over the company’s factory and catalog-printing plant. That spire, now called Nichols Tower, got a new lease on life as a community center and hub of nonprofit groups focused on housing and education.