As reported in The Real Deal.

Across Florida, Seritage Growth Properties, the publicly traded Sears REIT, has been working quickly to repurpose old Sears and Kmart stores since the department store retailer went bankrupt in 2018 and closed more than 100 stores in the U.S. A year ago, the firm transformed an 88,400-square-foot Hialeah Kmart into a shopping plaza featuring Bed, Bath & Beyond, Ross Dress for Less and dd’s Discount. Nearby, the company plans to convert a recently shuttered Sears store and auto center at the Westfield Mall into a movie theater and retail spaces that will house Ulta Beauty, Five Below and Panera Bread. In Gainesville, Seritage redeveloped another Kmart store, totaling 139,100 square feet, into an office building for the Florida Clinical Practice Association and the University of Florida College of Medicine.

The strategy is paying off. According to Seritage’s Q4 2019 quarterly report, the firm is collecting new national retail rents averaging $20.35 a square foot compared to $7.51 a square foot that was being paid by Sears and Kmart. In Miami-Dade County, average asking retail rents were $38.18 per square foot in Q4 2019, up from $34.81 during the same period in 2018, according to Colliers International. Seritage also increased the share of non-Sears tenants from 54.3 percent in 2018 to 83.3 percent last year.

The demise of Sears, Kmart, Sports Authority, Toys ‘R’ Us and other major department store retailers in recent years jolted big box landlords in South Florida and across the country. To fill their empty massive stores, some property owners have followed Seritage’s formula of splitting up a big box to attract discount apparel companies such as Ross and Burlington, which do not need as much space as a traditional department store. Others have been lucky enough to fill entire stores by luring grocery chains like Sprout and furniture retailers like At Home.

“Seritage and all other landlords are taking advantage of what were low rents from Sears and Kmarts and creating a value-add opportunity by leasing to higher paying tenants,” Alan Esquenazi of Colliers International said.

Infill ideas

A few landlords, such as shopping center developer Raanan Katz, are planning ambitious mixed-use projects on former big box sites. Katz’s company RK Centers wants to transform the site of a Sears building in Fort Lauderdale into a massive development that would have four towers with 854 residential units, a 192-room hotel, 11,065 square feet for restaurants, cafes and a food hall and 86,990 square feet for retail, office and art gallery spaces. In the city’s burgeoning Flagler Village neighborhood, the proposed project was first presented at a Fort Lauderdale design review committee meeting in January.

 

 

https://therealdeal.com/miami/2020/03/30/landlords-are-slicing-up-vacant-big-box-stores-to-get-new-tenants-and-its-working/?utm_source=Sailthru&utm_medium=email&utm_campaign=South%20Florida%20Daily%20%7C%2003.31.20&utm_term=South%20Florida%20Daily