Sears turns to renting out real estate to make a few bucks
Last week, Sears Holdings Corp. opened its own commercial real estate business under the name SHCRealty.com to sell or lease its thousands of both vacant and operating Sears and Kmart stores and associated properties. The site lists 67 shuttered stores and 3,779 of what Sears calls "operating opportunities" – properties with space available for in-store shops or with adjacent land or space in the parking lot for lease.
The Chicago Tribune, Sears' hometown newspaper, reported that getting into the real estate business was a way for the company to raise money.
"I don't know anybody who's done it at this scale," Alan Barocas, an Atlanta-based retail real estate consultant and the former senior vice president of real estate for Gap Inc., told the newspaper. "It's a way for them to generate revenue from their real estate. It's purely an income stream."
When I need almost anything at our weekend house on Lake Erie, the closest place to get it is Woodhaven, Michigan, a four-corner town with Kmart on one corner, Walmart across the street, Target down the block and Meijer, the regional favorite, kitty-corner from it.
New York analysts say business was up 0.3% in the first quarter at Sears. But you couldn't prove it from here. While the Kmart looks closed, Walmart just became a Super Walmart, doubling in size. Meijer is undergoing a complete remodel, and shopping at Target requires patience because the checkout lines are so long.
I went looking for an old-fashioned Schwinn cruiser bike this weekend -- with coaster brakes and one speed. After an hour, it was clear why there wasn't anyone at Kmart. Walmart was selling classic Schwinns and Huffys for $99 and $89 respectively. Target had a classic Schwinn in a stylish bright red for $119 and the basic model in blue for $99. Meijer had an off-brand for $79. And poor Kmart, although they had a $79 off-brand, was trying to sell a Schwinn that was almost the identical model that Walmart was selling, but the price was $149. No wonder the parking lot is empty.
According to research firm Kantar Retail, the average sales per square foot in 2009 was $111 at Sears stores and $107 at Kmart stores, $280 at Target and $416 at Wal-Mart.
That explains why Sears/Kmart has to rent out its spare rooms.