Vacant Sears Stores Find New Life as Housing in Mixed-Use Malls

As the last vestiges of what was once the largest retailer in the US close their doors, the property they occupied has become a hot CRE commodity.

Sears, Roebuck & Co., which opened its first store in Chicago in 1893, at its zenith became the top retailer in the US with more than 4,000 stores and 350,000 employees. Selling clothing, appliances and everything in between, the chain was the bricks-and-mortar version of Amazon long before Amazon existed.

When the real Amazon showed up and began spreading its online tentacles across the retail universe, the downfall of Sears commenced. When the department store and auto service center chain filed for bankruptcy in 2018, Sears was a shadow of its former self, with about 700 stores.

The retail giant had hoped to stave off its demise with the Chapter 11 filing, but the “retail apocalypse” during the pandemic finished it off: now, there are only 12 Sears department stores and no Sears Auto Centers. There’s only one Sears outlet left in New Jersey, which has more malls per capita than anywhere.

As shopping malls began proliferating across the US in the 1960s, Sears positioned its Sears Auto Centers—the first one opened in 1931—in the middle of mall parking lots, where they remained outside after many of the malls became indoor shopping meccas.

This unique configuration—a Big Box Store and a smaller auto center connected by a significant chunk of the mall’s parking lot—have made former Sears outlets prime sites for developing residential units as shopping mall owners reposition their mall properties with experiential live/work/play mixed-use elements, the most successful recovery strategy.

Sears outlets at several California malls are being redeveloped with homes, the latest is project announced this week to replace a shuttered Sears department store and Sears Auto Center at the Buena Park Downtown Mall with 1,300 homes, including 1,176 apartments and 126 townhomes.

The 25-acre redevelopment by San Diego-based Merlone Geier Partners will replace an anchor store which closed in 2020—when Sears announced it was closing 100 stores—at Buena Park Downtown, a mall located on 8150 La Palma Avenue in Buena Park, the Orange County Register reported.

Merlone Geier plans to build four apartment buildings in the residential project, to be known as the Village at Buena Park, of between five and seven stories each in two phases, with complete delivery slated for 2027.

Merlone Geier also planning a $370M redevelopment of a defunct Sears store in Glendale into a 700-unit multifamily campus.

Other Sears-to-housing redevelopments include Simon’s plans to replace a former Sears at the Brea Mall with a 380-unit urban-retail village. Irvine-based Shopoff Realty Investments is developing a 26-acre urban village with more than 1K apartments, 102 townhomes and a 175-home hotel on the 14 acres Sears stores occupied at the Westminster Mall in Orange County.