Aug 20

As the once-dominant Sears fades from Houston’s memory, new retailers rise in its place

The Midtown Sears is being converted to a tech hub. Crews are tearing down the Memorial City Sears in West Houston. Now, the freestanding Sears on North Shepherd, the last active Sears department store in the city, is set to close Aug. 30.

Once the nation’s dominant retailer — and now a case study in how not to adapt to a changing environment — Sears may soon fade from Houston’s memory. But its real estate is being rethought for the future.

Mall owners such as Memorial City’s MetroNational are working to turn former Sears stores into profitable space at a time when enclosed malls across the country are foundering. Jason Baker, a Houston real estate broker and principal at Baker Katz, said the Memorial City redevelopment offers an opportunity for MetroNational to build outdoor patios, bring in culinary destination and draw more foot traffic from neighborhoods immediately surrounding the mall.

“I’m excited for them because this was, in my view, for a mall this age — this was they key piece to really unpacking the mall’s real potential,” he said.

Not all redevelopments are welcome.

Freestanding Sears sites like the one in Midtown have been accessible to lower-income neighborhoods, both in price point and geography, said Laura Solitare, an associate professor of urban planning and environmental policy at Texas Southern University. Many in that area don’t have cars, she said, and so the Sears closure there leaves a neighborhood without a place to buy clothes and applicances.

“That area is losing a lot and not much necessarily is coming in,” she said.

Transformations

The rise and fall of Sears, whose famous catalog made it the Amazon of its day, has been well documented.

Retailing moved online, Walmart took the low-end market, affluent shoppers flocked to boutique retailers and Target dominated the middle of the road.

“Sears tried to be everything to everybody,” said Bill Fulton, executive director of Rice University’s Kinder Institute for Urban Research. “In 2020, that model just doesn’t work anymore.”

Displaced as a retailer, the vast real estate legacy Sears left behind is now undergoing a transformation. Fulton said he expected to see high-rise residential developments cropping up in place of large, big-box stores.

Crews tearing down the former Sears building at Memorial City Mall are making way for a new outdoor “lifestyle” and retail district — phase one in a redevelopment process that focuses on consumer experience and walkability. In Midtown, Rice University readies to transform a former Sears into a $100 million tech hub, called the Ion, signaling another tectonic shift in the economy.

Elsewhere, the former Sears store in the Westwood Mall is now a car dealership, while the one at The Woodlands Mall lives on as a Nordstrom. The Wall Street Journal has reported that Simon Property Group and Amazon are discussing a deal to convert shuttered Sears and J.C. Penney locations in other markets to fulfillment centers for the e-commerce giant.

The North Shepherd store is owned by Seritage, a real estate investment trust spun off from Sears in 2015. At the time, Sears sold Seritage some 235 properties for $2.7 billion.

Seritage representatives did not return requests for comment about its plans for the North Houston space.

Baker, the retail estate broker, said Seritage scooped up the North Shepherd property for its potential. It is desirable both because of its size and the growing area it sits in.

The old Sears store will likely get torn down, he said, with its redevelopment split between multi-family residential and retail uses.

“It is good spacing for probably a lot of retailers, including things like Target,” he said. “Home Depot and Lowe’s are right there; this has been a good market for them.”

Nationally, more vacant retail properties are turning over to warehouse space as e-commerce booms, with “dead malls” in Milwaukee, Cleveland, Chicago, Omaha and Dallas/Ft. Worth driving the trend, according to the CBRE, which tracks the real estate market. There are now 59 projects completed or underway since 2017, up from 24 in January 2019, a CBRE survey found.

These conversion projects are often located at freestanding big-box stores with large parking lots and multiple access points. The pandemic will only spur the phenomenon, the CBRE said, and property conversions could soon ripple into more areas in points to the West and Southeast.

But even as the pandemic accelerates trends away from brick and mortar, some Houstonians haven’t changed their shopping habits and are frustrated to see their neighborhood Sears store go.

B.R. Brooks, 74, has been shopping at the Sears on North Shepherd for more than 50 years. It’s where she had her keys made and took her sons back-to-school shopping. She still takes her car to the Sears Auto Center next door and shops while she waits.

She doesn’t have a computer and doesn’t shop online, she said. Without Sears, she won’t know where to go.

“It’s really heartbreaking that they’re closing,” she said while leaving the store last week. “It’s a one-stop-shop. Whatever you needed, it was right here.”

By Amanda Drane
Houston Chronicle
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