Add another store to the list of Sears locations that are closing.
The iconic one-time giant retailer will be shuttering its 242,686-square-foot store at Plaza Las Americas in San Juan, Puerto Rico. The mall's general manager disclosed the news earlier this week, and JLL is already marketing the property for sublease.
Sears currently has eight stores, but the closing in Puerto Rico and others planned could slice that number in half, to just four. The department store operator has already posted "going-out-of-business" signs at another one of the stores it's closing, at Whittwood Town Center in Whittier, California.
The future of two other Sears stores, both in Florida, is uncertain. A 1,000-unit multifamily development is planned for the site of a Sears at Searstown Plaza in Miami. A Sears location at the Florida Mall in Orlando is also up for sale or lease, according to a marketing brochure.
The four remaining Sears stores are at: Burbank Town Center, Burbank, California; Sunvalley Mall, Concord, California; South Shore Plaza, Braintree, Massachusetts; and Cielo Vista Mall, El Paso, Texas.
Hoffman Estates, Illinois-based Transformco, owner and operator of the Sears stores, and JLL didn't respond to separate emails from CoStar News on Friday seeking comment on the closing location in Puerto Rico.
Big real estate portfolio
At their peak, Sears and its sister company Kmart had nearly 3,500 stores. Sears Holdings — the owner of Sears and Kmart — filed for Chapter 11 bankruptcy protection in 2018 in the wake of competition from discounters. The company was then sold to former CEO Eddie Lampert, who launched Transformco to handle its brick-and-mortar portfolio in 2019.
While Transformco has been closing Kmart and Sears stores ever since, it still owns a large real estate portfolio of former Sears and Kmart locations that it either owns or has non-owned leasehold interests in — in other words, the long-term right to possess and use a property.
Earlier this week, Edwin Tavárez, general manager of the Plaza Las Americas, gave local media a statement about Sears approaching him about the closing, likely in August.
"Out of respect to our tenant of 40 years’ internal processes, we prefer that Sears announce when the business will close," Tavárez said. "We regret this situation, principally for its effect on the company’s clients and employees. However, the Sears location in Plaza Las America managed to be one of the chain’s last stores in operation."
JLL's marketing brochure touted the attributes of the Sears space for a tenant to sublease.
Attractive location
"Plaza Las Américas is the largest and most successful shopping center in Puerto Rico with reported sales in excess of $900 [per square foot]," the flyer said. Tenants include major retailers such as Marshalls, Burlington, J.C. Penney, Macy’s, Zara, Forever 21 and Victoria’s Secret.
Transformco's real estate strategy can be more lucrative than running a retail chain, according to Rudy Milian, president and CEO of retail consultant Woodcliff Realty Advisors.
"Transformco may be closing Sears stores, but its real estate subsidiary Transformco Properties is holding onto the underlying real estate asset to make a play that will produce much more revenue than a Sears store will ever bring," Milian said in a post on LinkedIn.
In various cases Transformco has either by itself, or with a partner, redeveloped former Sears stores, leasing the space for a higher rent than Sears was paying.