Macerich Eyes Makeovers for Former Sears Boxes

Image courtesy of Transform SR Brands LLC

Macerich has acquired the remaining 50 percent interest in five former Sears boxes totaling 819,000 square feet of space from joint venture partner Seritage Growth Properties, an important part of the company’s plans to continue redeveloping the properties in Connecticut, Arizona, California, New Jersey and Oregon.

The retail and mixed-use property REIT now fully owns and controls each parcel. The properties where the Sears boxes are located are all high-performing regional town centers in the Macerich portfolio: Danbury Fair, Danbury, Conn.; Los Cerritos Center, Cerritos, Calif.; Washington Square, Portland, Ore.; Chandler Fashion Center, Chandler, Ariz.; and Freehold Raceway Mall in Freehold, N.J. Santa Monica, Calif.,-based Macerich currently owns 47 million square feet of real estate consisting primarily of interests in 44 regional town centers, many of which contain mixed uses.

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Dave Short, executive vice president, asset management, Macerich, said in a prepared statement the transaction builds on the prior leasing and activation of several of the spaces, allowing the company to continue to pursue redevelopment of the properties in several ways including bringing in highly productive retail performers and adding mixed-use and greater density.

Leasing and redevelopment activity at the former Sears boxes includes:

• Danbury Fair—The former Sears space is leased to Primark, which is open and operating, and Target, which is under construction and set to open in spring 2024. Target will have a two-level store with a total of 126,000 square feet. The combined sales volume of the two retailers will represent a dramatic increase over the prior Sears use, according to Macerich.
• Los Cerritos Center and Washington Square—Both of the properties are either in the process or are fully entitled for redevelopments that will create value by adding density and diverse uses, Macerich stated. The company will consider replacing the former department store anchor pads with new uses that have been successful in some of its other retail properties including fitness, residential, hotel, office and medical.
• Chandler Fashion Center and Freehold Raceway Mall—Similar to Danbury Fair, the plan is to lease the former Sears spaces to multiple, high-traffic-generating retail, entertainment and/or restaurant users that will be good fits for their communities. Primark is already open and performing well in the former Sears box at Freehold Raceway Mall, according to Macerich.

Demise of Sears

Seritage Growth Properties was formed to unlock the underlying value of a high-quality retail real estate portfolio acquired from Sears Holdings Corp. in July 2015. As of March 31, the Seritage portfolio consists of interests in 72 properties comprising approximately 10.2 million square feet of gross leasable area or build-to-suit leased area. It also has approximately 157 acres held for or under development until time of sale and approximately 5.3 million square feet of more than 400 acres to be sold.

In April 2015, Macerich had formed a joint venture with Sears Holdings as the then embattled retail company was trying to enhance its financial flexibility and generate value from its real estate portfolio. At that time, Sears Holdings contributed nine properties where Sears had stores at Macerich malls to the joint venture, including properties leased to third parties, and leased the space back from the joint venture.

Three years later, in October 2018, Sears Holdings, which consisted of Sears and Kmart stores, filed for Chapter 11 bankruptcy protection. At that time, Sears Holdings operated 866 stores—482 Sears stores, 24 Sears specialty stores and 360 Kmarts. Today, both retailers exist mainly as online operations with only a small number of brick-and-mortar stores throughout the country.