Feb 14
The Sears at Deerbrook and Willowbrook malls are reportedly closing, opening up a rare opportunity for the malls to redevelop a large portion of its retail space.
The closures would join Sears locations that have shuttered in Midtown, Memorial City Mall, West Oaks Mall, Central Mall in Porter, San Jacinto Mall in Baytown, Mall of the Mailand in Texas City and Parkdale Mall in Beaumont in recent years.
Larry Costello, spokesman for Sears parent company Transformco, declined to comment on the closures, which were first reported by USA Today and Community Impact Newspaper. Brookfield Properties, the Chicago-based owner of the two malls, declined to comment because it does not own the Sears real estate.
Jason Baker, a retail broker with Houston-based Baker Katz, who is not involved with the properties, said the closures would not surprise him. Sears, which emerged from Chapter 11 bankruptcy last year, has shuttered more than 500 stores over the past five years in its ongoing efforts to streamline operations amid declining sales and foot traffic.
After the Deerbrook and Willowbrook stores close, only two Sears locations will remain in the Houston area: the longtime North Shepherd location and Macroplaza Mall in Pasadena.
“Unless you’ve had your head in the sand, the story around Sears is it’s dying or dead,” Baker said. “But it’s created a real opportunity to reposition malls. There’s more good than bad here.”
UPDATE OPPORTUNITY
Mall owners nationally are seizing opportunities to redevelop Sears space to attract consumers increasingly shopping online. Local Sears stores have become a Nordstrom at The Woodlands Mall, a future start-up hub at the Midtown location and a new car dealership in the case of Westwood Mall.
It’s not easy to redevelop Sears properties. The department stores are large, multi-story building that can be difficult to split up and find new tenants. Mall owners must negotiate with Sears real estate owner Seritage Growth Properties as well as other anchor tenants to redevelop the stores.
Some owners are taking the Sears closures as an opportunity to re-imagine the entire mall.
MetroNational last year inked an agreement with Seritage to redevelop a 209,000-square-foot Sears store, which closed in late 2018. But the prolific Houston developer also hired Trademark Property Co. to re-envision the 1.7-million-square-foot mall with more outdoor space, restaurants and mixed-use tenants.
Likewise, Fidelis Realty Partners began demolishing most of the San Jacinto Mall, one year after the 152,000-square-foot Sears store closed in 2018. The Houston developer is redeveloping the mall into a so-called lifestyle center featuring 1.1 million square feet of shops, 80,000 square feet of offices, 20 restaurants and an outdoor concert space the size of two football fields. The first phase of the new shopping center is expected to open later this year.
PRIME PROPERTY
The latest Sears closures would leave a 147,110-square-foot and a 174,663-square-foot vacancy at Deerbrook and Willowbrook malls, respectively.
Baker, the retail broker, said Sears occupies some of the best real estate within the two malls. At the Deerbrook mall, in particular, the department store is the first anchor tenant most drivers see when they exit FM 1960 to go to the mall.
“There are no cars and no traffic in front of that Sears,” Baker said. “If I’m a mall owner, that Sears is an albatross. (The closure) is their best chance of changing that.”
Brookfield declined to comment on its plans for the malls, but said it was a long history of redeveloping retail.
Baybrook Mall, which lost its Sears in 2018, added a 285-square-foot lifestyle center with more than 30 new retailers and restaurants surrounding a large green space. First Colony Mall, which never had a Sears, replaced two reflecting ponds with a green space surrounded by patio restaurants, chairs and lawn games as well as a large video screen.
Written by Paul Takahashi
Houston Chronicle