Make us your home page
Instagram

Tyrone Square Mall redevelopment a sign of the times for retail

ST. PETERSBURG — The fences are up and the construction has started. The former Sears department store at Tyrone Square Mall, which had been open for nearly 50 years, closed months ago to make room for new development: Tampa Bay's first Lucky's Market organic grocery store and a Dick's Sporting Goods.

It's a classic sign of the times for the American shopping mall — traditional department stores are closing at a remarkable rate while newcomers are gobbling up the prime real estate left behind after their funeral. But in an intriguing turn of events, the flailing, though long-standing Sears store that closed in St. Petersburg and the new tenants that are coming in after it, are all benefiting the same company. Or at least, the same owner.

Seritage Growth Properties is the New York-based real estate company in charge of a redevelopment plan at Tyrone Square Mall, which includes demolishing the 188,515-square-foot department store to make way for a new 151,952-square-foot shopping center for tenants like Dick's, Lucky's and Petsmart, with room for one more anchoring retailer. Seritage, which went public in 2015, is responsible for developing more than 200 Sears department store sites across the country. It's the same company that turned half the Sears space at Westfield Countryside Mall in Clearwater into a Whole Food Market.

Previous Coverage: Developer wants Sears out, Dick's Sporting Goods and Lucky's Market in at Tyrone Square Mall

The link? Billionaire Eddie Lampert.

Lampert is the founder and chairman of a lot things. He's the chairman of Sears Holding Corp., the parent company of Sears and Kmart, where he also became the company's CEO in 2013. He owns the majority of shares in Sears Holding Corp., too. The former AutoNation executive is the head of ESL Investments, his own real estate hedge fund. And guess what? He's the chairman of Seritage Growth Properties, the real estate development company spinning off 200-plus department stores.

It's worth noting that the market value of Sears Holding Corp. is about a measly $800 million compared to Seritage's $2.4 billion value.

Clearly this is a lucrative move for Lampert and Seritage, and in some cases, Sears, which like many other retailers, has more stores than really makes sense these days. As Sears stores continue to under perform, Seritage can stop the bleeding by closing a store altogether or by leasing out part of its large space to another tenant.

"It's a unique situation. Certainly the value of these department stores are in their real estate," said Jeff Green, a retail analyst based in Phoenix. "It's a way for the Sears' parent company to monetize some of these locations by spinning them off into a separate public company."

Think of Seritage as the landlord of a good chunk of Sears department stores. When they come up with a better plan for that real estate's future, Seritage has the right to kick out its current tenant or change up the size of the store through the leases its signed with Sears.

As of January, Sears leased 337 of its 670 full-line Sears stores and 668 out of 735 Kmart stores through Seritage, according to a company spokesman. Seritage owns 266 of those locations, giving them a playground of more than 40 million square feet of retail space to experiment with.

"It's a smart way of downsizing the box," Green said. "What you're finding now is that Sears stores are too big. In many cases the retailer is closing its second story and just operating out of the first one. Redevelopment is a great cost savings measure, and its an attempt to keep the retail company viable for a little longer."

Malls may be the least relevant today than they've ever been, but their real estate is still incredibly valuable, analysts say.

"If a store isn't performing there are plenty of others who are lined up to take over that desirable space," said Steve Kirn, a lecturer on retail at the University of Florida. "Sears has some very good locations, places that are highly desirable for a Dick's Sporting Goods or a Whole Foods. Space can easily be reconfigured."

It's interesting to see a CEO and chairman that will benefit no matter what the future holds for the struggling retailer he basically owns and oversees.

Or maybe Lampert just sees the writing on the wall. Department stores are very quickly becoming relics of retail's past, with the likes of Amazon and others surging ahead in the digital and brick and mortar spheres. The only value Sears has left, after years of steadily declining same-store sales, layoffs and store closures, is the real estate parcels it owns at malls around the country.

So what happens when and if Sears goes down for good? Seritage will likely pivot and work with other retailers. The real estate firm has completed 50 commercial real estate projects with a combined investment of $500 million since its inception in 2015. While the vast majority of the company's investment is in Sears, Seritage also has interests in 31 properties through joint venture investments with major mall developers like General Growth Properties, Simon Property Group and Macerich.

Contact Justine Griffin at jgriffin@tampabay.com or (727) 893-8467. Follow @SunBizGriffin.

Sears Holding Corp.:

Operates: 651 Sears stores and 624 Kmart stores

In June, Sears announced it would lay off 400 workers

Sears will close 150 stores this year

 

Seritage Growth Properties:

Owns: 266 Sears department stores and leases the property back to the retailers

Projects: 50 commercial real estate projects since 2015, which total $500 million in investment

Local projects: Lucky's Market, Dicks Sporting Goods at Tyrone Square Mall; Whole Foods Market at Westfield Countryside; 23 properties in Florida total including the Kmart in St. Petersburg.

Tyrone Square Mall redevelopment a sign of the times for retail 07/14/17 [Last modified: Saturday, July 15, 2017 12:57am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. As Dow hits new high, Raymond James Financial reports record financial gains

    Banking

    On the same day that the Dow closed at new highs, investment firm Raymond James Financial reported record revenues and earnings for its fiscal third quarter that ended June 30.

    Raymond James Financial CEO Paul Reilly unveiled record quarterly revenues and earnings for the St. Petersburg-based investment firm. [Courtesy of Raymond James Financial]
  2. Florida GDP growth in first quarter 2017 ranks 21st among states, still outpacing U.S.

    Economic Development

    Florida's gross domestic product or GDP rose 1.4 percent in the first quarter, slightly faster than the nation's growth of 1.2 percent and placing Florida 21st among the states for growth rates, according to the U.S. Bureau of Economic Analysis.

    Not too hot. Not too cold.

    These Jackson Square Townhomes began hitting the west Hillsborough County market late last year and continued to be sold into the first quarter of 2017. The real estate sector was the biggest driver of Florida's gross domestic product, which rose 1.4 percent in the first quartrer of 2017.  [JAMES BORCHUCK   |   Times]
  3. A new app will help you find your favorite Tampa Bay food trucks

    Food & Dining

    What's new: Food tech

    Local food businesses are embracing new technologies and partnerships to bring us extra deliciousness.

    Michael Blasco of Tampa Bay Food Trucks says that everyone always asked about an app to help find their favorite food trucks. There is, available for iPhones and Droids.
  4. Another Pinellas foreclosure auction fools bidders, raises questions

    Real Estate

    For the second time in six weeks, a company connected to lawyer Roy C. Skelton stood poised to profit from a Pinellas County foreclosure auction that confused even experienced real estate investors.

    A Palm Harbor company bid  $112,300 for  this Largo townhome at a foreclosure auction July 21 not realizing the auction involved a second mortgage, connected to lawyer and  real estate investor Roy Skelton -- and that the bank could still foreclose on the  first mortgage.
[SUSAN TAYLOR MARTIN   |   Times]
  5. Clearwater-based USAmeriBank acquired by New Jersey bank in $816 million deal

    Banking

    CLEARWATER — USAmeriBancorp, Inc., based in Clearwater, is being acquired by New Jersey's Valley National Bancorp in an $816 million deal, it was announced today.

    Joe Chillura, CEO of USAmeribank, shown inside a branch in Ybor City in this file photo.
[KATHLEEN FLYNN l Times]