An icon of American retail is getting new life.
All across the country, old Sears stores have been undergoing major transformation ever since the retailer filed for bankruptcy in 2018. Spinoff holding company Seritage Growth Properties has redeveloped or sold off Sears and Kmart real estate bit by bit since its creation in 2015 — three years prior to Sears’ Chapter 11 filing — and Seritage shareholders in October approved a plan to sell all of its remaining assets and liquidate the company.
While many department stores had valuable physical real estate, with plentiful parking and known locations, fewer shoppers spending less money combined with the eventual rise of e-commerce platforms ultimately spelled disaster, said retail analyst Floris van Dijkum, a managing director of Compass Point Research & Trading.
“A lot of these guys had too much space,” he said. “Seritage had a bunch of really good boxes at really good malls, but they were saddled with this terrible balance sheet.”
In Greater Boston, Sears locations in high-profile, well-performing locations have already been sold off or redeveloped. At the Northshore Mall in Peabody and the Burlington Mall — two Simon Property Group malls — Sears locations that shuttered in 2018 became a Life Time fitness center and a string of restaurants, respectively.
Seritage, for its part, has a $1.6 billion term loan with Berkshire Hathaway Life Insurance Co. and, so far this year, has announced prepayments of $540 million. Its recent spate of sales in New England (all of which were arranged by Atlantic Capital Partners) include Sears locations on Route 1 in Saugus and at least three New Hampshire properties: at the Mall at Fox Run in Newington, the Mall at Rockingham Park in Salem, and the Pheasant Lane Mall in Nashua.
At the Saugus spot, new owner OVP Management has already seen a lot of interest from prospective users, said managing partner Rob Barsamian, including a number of furniture warehouse outlets looking to enter the Massachusetts market.
“We’ve had a lot of calls on it,” Barsamian said. “We’re trying to assess what’s the highest and best use, and how it’s going to fit in with the community.”
In Cambridge, New England Development mulled redevelopment options for almost a decade at the CambridgeSide shopping center near Kendall Square, said president Douglass Karp, and had undertaken a renovation a few years ago. But it was clear that what had historically been anchor locations weren’t really anchors anymore, Karp said.
“A three-level mall served its purpose, in a time and a place, but the reality was the three-level mall in the future looks different. It’s not going to be all retail,” Karp said. “You’re going to see a lot of these historically retail boxes transform into other uses over time.”
So now, both the Sears and the Macy’s stores on opposite corners of CambridgeSide are being transformed into lab and office space, with developer Anchor Line Partners and Northwood Investors LLC taking on the former Sears at 60 First St. Biotech startup Prime Medicine agreed to lease nearly 150,000 square feet there, with RNA editing company Korro Bio also leasing space. That building is slated to open early next year, Karp said, while the redeveloped former Macy’s will open in 2024.
A lab conversion made sense in Kendall Square, a market long attractive to biotech companies looking for a Cambridge address, Karp said. The mall itself also brought a host of appealing amenities, including restaurants, a CVS, and other retailers. New England Development took a different tack at its Westgate Mall in Brockton, however, replacing a former Macy’s with more traditional retail tenants: Dick’s Sporting Goods, a Burlington apparel store, and a Planet Fitness.
“We explore this on any project that has a traditional anchor on it, and try to understand what other uses might go there,” Karp said. “Sometimes it could be retail, and other times it might be residential, and other times it might be office or lab.”