Sears Holdings is probably not very popular with retail real estate landlords nowadays.
The company, which owns its eponymous chain, as well as Kmart, has had problems for well over a decade now.
There has been hope, over the years, that Sears executives would figure out what was happening and turn things around, but that has been to no avail. There have been years of lagging sales and profit declines, as well as major Sears and Kmart closings.
Now it looks as though Sears Holdings is near ready to thrown in the towel. The company said, in its annual report, that there is “substantial doubt” about the retailer’s ability to continue as an entity.
If Sears goes completely out of business, then this would obviously be problematic for shopping-center owners. After all, it operates about 1,500 stores across the country. This would create some serious vacancies in malls and other shopping centers that landlords will need to fill.
It’s not all bad news, though. Most landlords, if they had any foresight, saw this possibility coming a long time ago. Hopefully they have been prepared to make major adjustments in case this massive store-closure situation takes place.
Plus, it’s not as if either Sears or Kmart have been the most desirable tenants right now. For example, it doesn’t exactly look good in a shopping center when one of the most major stores in your asset has going-out-of business sales.
There are several other tenants out there who are filling up empty big boxes, though, from restaurants, to gyms to cinemas to churches, so many locations will likely turn into other uses.
But that’s not going to be the case for every store, if Sears Holdings goes out of business.
If the company entirely goes under, then there is going to be pain in the retail real estate sector, without a doubt. Plus, there are several other store closures on the horizon that owners are already dealing with.
Hopefully the retail real estate industry is ready for this impact and can bounce back from the major tenant transition.