It is no secret that retail giant Sears filed for bankruptcy and has closed nearly all of its stores within the United States. The question has been what will happen to those stores. Will another retailer snatch them up, or will they sit empty for years to come? Now, it seems that tearing many of them down may be the best option.

Store Closings by Numbers

Sears already indicated that following its bankruptcy, it will shut 142 stores by the end of 2018. The future of Sears is a bit uncertain, and it is currently in bankruptcy court. One potential outcome is a complete liquidation, and if that happened, then more than 500 more Sears (and Kmart) physical stores could close.

Filling the Space Is a Challenge

Given today’s retail space, owners of malls where Sears previously had stores are having some serious problems filling the space left behind by the retail giant. Most Sears stores cover over 100,000 square feet and have several levels. The number of retailers who need a space this size is relatively low. The number of retailers who use that amount of space and are actively growing, making them likely tenants, is miniscule. Some big companies have already shown some interest, including Burlington, At Home, and U-Haul.

Even so, most real estate owners would find it much easier to divide up a Sears store and rent it in pieces than to just rent or sell it as is. Unfortunately, that process would involve a great deal of costly construction. Some mall owners have successfully done just this, but it can prove a challenge.

Tearing Down the Store Is the Best Alternative

Combine the high cost of construction with the fact that even between the various interested companies like U-Haul, At Home, Burlington, and others, there would not be enough interest to use all the emptied Sears stores. With that in mind, it becomes the most cost-effective option to just demolish a Sears store. By tearing down the store, there is no need to worry about how to divide up the space or concerns about supporting structures.

One retail expert pointed to the actual cost of each option. Greg Maloney, who is the CEO and President of JLL’s Americas retail, indicated that retrofitting a Sears store or dividing it into several smaller spaces can cost about $100 per square foot. By contrast, demolition would be around $30 per square foot, with a similar cost to build new stores. Mathematically, it is cheaper to tear down an empty Sears and start from scratch, assuming it cannot be filled as-is.

Source:

https://www.cnbc.com/2018/12/12/your-shuttered-sears-store-could-soon-be-demolished-heres-why.html

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