What’s left of Sears? Stores and HQ are nearly gone, but successor still owns and leases many properties

Many goodbyes already have been said in Sears’ native Illinois, with its last great headquarters rapidly fading from the landscape of Hoffman Estates to make way for Dallas-based Compass Datacenters’ forthcoming campus.

But the one-time retail giant’s 139-year-long story continues without an apparent expiration date at eight remaining stores elsewhere in the country and as a landlord of commercial properties both near and far.

Undoubtedly the nearest to its former headquarters is the longtime anchor store site at Woodfield Mall in Schaumburg.

Sears’ successor, Transformco, which emerged from the original company’s bankruptcy, continues to own and lease the 200,000-square-foot space. It already has been subdivided and repurposed as a Primark apparel store upstairs and Zellano Home Furniture below, with the potential for three further tenants using the lower level’s external entrances.

Though Transformco officials did not respond to a request for comment, Schaumburg Economic Development Director Matt Frank said he knows of no plans for the company to sell off the property and end its involvement with the mall whose name is partly derived from that of former Sears President Robert Wood.

The primary mission of Transformco is to monetize Sears’ real estate. This can occur through either selling or leasing it, according to John C. Melaniphy, president of the Chicago-based retail consulting firm Melaniphy & Associates.

The examples of selling properties where there wasn’t an obvious redevelopment opportunity for itself are probably more numerous in our area, Melaniphy added.

These include former Sears sites at Charlestowne Mall in St. Charles, Fox Valley in Aurora, Golf Mill in Niles, Hawthorn Center in Vernon Hills, Spring Hill Mall in West Dundee and Stratford Square in Bloomingdale.

There also are places where Sears was always a tenant itself. The already redeveloped former site at Oakbrook Center appears to have been among those, according to Oak Brook Development Services Director Rebecca Von Drasek.

But Transformco probably recognizes a greater ongoing opportunity for itself at stable class A shopping centers like Woodfield, Melaniphy said.

Though the company’s presence in any one market may be small in the future, there could be enough such opportunities nationwide to sustain it, he added.

And the potential could exist for Transformco to expand beyond its original portfolio like any other commercial real estate firm.

Nevertheless, the current environment probably is more challenging than it was when Transformco first emerged from Sears’ bankruptcy, Melaniphy said.

“In my opinion, it will take years to unwind all of the properties that are encumbered through either Sears/Kmart leases or ownership,” he added. “Transformco leadership will determine their short-term and long-term success. However, the company has experienced talent losses with fairly significant employee turnover. The current mall redevelopment environment, with rising store closings and greater e-commerce market share, is a serious threat to their long-term success. Transformco leadership will be challenged in their effort to navigate the peaks and valleys in development cycles. In my opinion, they will sell off the remaining assets as quickly as possible.”

But Melaniphy sees Transformco’s recent sales of two former Sears stores in Texas for their redevelopment into Dick’s Sporting Goods House of Sports locations as signs of success in its mission.

“This is a big win for Transformco,” he said. “There remain opportunities for Transformco to redevelop these former Sears stores but the velocity of leasing/redevelopment has been sluggish at malls. More recently, retail vacancy rates have been declining as a result of limited new development. These former Sears stores represent an opportunity since there is less second-generation space available.”

As of early spring, the remaining Sears stores were in Burbank, Concord and Whittier in California; Orlando and Miami in Florida; Braintree, Massachusetts; El Paso, Texas; and San Juan, Puerto Rico.

Melaniphy said these likely have proven to be especially good markets for Sears to have avoided closure up to this point. In the case of San Juan, it’s a market that’s about a decade behind the retail trends of any part of Illinois, he added.

A quarter of the way through the 21st century, other lingering evidence of Sears’ long and proud history in the Chicago area include the third-tallest building in North America and the call letters of radio station WLS, which stands for “World’s Largest Store” for the four years Sears owned the station in the 1920s.

It was Chicago's central position in the nation’s railroad and highway networks that made it a better place for founder Richard Sears to operate the mail-order watch company he’d started in Minneapolis the year before, 1886.

In Chicago, Sears partnered with watchmaker Alvah C. Roebuck, leading to the longtime name of the firm being Sears Roebuck and Co. Its first catalog featuring only watches and jewelry was published in 1888, while its first large catalog of general merchandise came along in 1896.