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Sears to Sell Three Florida Stores, Distribution Center

Retailer Puts 2.35 Million SF Up For Grabs Amid Focus on Internet Shopping
September 11, 2018
The Sears store in Daytona Beach, Florida, is one of three being listed for sale.

Sears Holdings is unloading 2.35 million square feet of real estate across Florida, including the state's largest industrial building, as the struggling national retail stalwart shrinks its brick-and-mortar footprint, shores up capital and focuses on online sales.

Avison Young said it is marketing for Sears the 1.9 million-square-foot Sears Southeast Distribution Center in Ocala, north of Orlando. The retail stores are located in Tampa, Port Richey and Daytona Beach, Florida.

Michael Fay, Avison Young’s managing director in Miami, said that Sears intends to keep operating the distribution center through a sale-leaseback, though the new owner could subdivide some of the space.

“It’s a well-located distribution facility,” Fay said. “Within four or five hours, you’re in a major regional area of Alabama, Georgia and all parts of Florida.”

Fay added that the three stores are all in good locations with no redevelopment challenges.

Avison Young’s Brian de la Fé noted that only the Tampa store is set to close. The other two Sears stores will keep operating, though a new owner could reduce Sears’ space and bring in two or three tenants, he added.

Sears has announced closings of more than 200 stores this year because of sagging sales as more consumers prefer to shop online. The retailer has been unloading properties for some time as a way to raise cash.

In a letter to the board last month tied to a proposal to buy the rights to the Kenmore brand and the company's Parts Direct business, Chief Executive Eddie Lampert noted "speed and certainty" were critical to helping Sears "alleviate its liquidity challenges."

In 2015, Sears sold more than 200 sites to Seritage Growth Properties, a real estate investment trust that Lampert formed. He made himself the chief executive of the REIT.

With the help of a $2 billion loan from Warren Buffett's Berkshire Hathaway Holdings this summer, Seritage has started redeveloping the properties, some into high-end residential and entertainment projects.

At the Aventura Mall in Aventura, Florida, for instance, Seritage is renovating a former Sears store into a retail complex with offices.

Selling the three Florida department stores may prove difficult for Sears because the buyers would still need the approval of mall owners for what goes there, said Alan Bush, a retail consultant with Northlake Partners in West Palm Beach.

“You’re not in control of your destiny,” Bush said. “That’s a concern.”

But Katy Welsh, senior vice president of retail for Colliers International in South Florida, said she expects mall owners to work with buyers to keep from having dead anchor spaces.

Buyers could knock down the Sears stores and build residential or offices or attract new types of retail uses, such as entertainment and coworking tenants, Welsh added.

Welsh dismisses all the talk about a “retail apocalypse.”

“There’s plenty of opportunity,” she said. “We never would have put entertainment in a mall, and now we are. We’re lending other things to malls and making people happy.”

CoStar News Reporter Jennifer Waters contributed to this report.

Paul Owers, South Florida Market Reporter  CoStar Group   
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