United States mall owners view Sears’ bankruptcy as a “tragic” announcement that many believe will result in dumping millions of square feet of empty real estate onto the market that consists of store closures and varying vacancy rates. Though, Simon Property Group, the largest mall owner in North America, seemed to already predict the company’s closing, while the “ultimate, unfortunate demise” came as no surprise, CEO David Simon reports.
David Simon claims Simon Property Group has been preparing for Sears’ bankruptcy for quite some time, in which it is speaking with up-and-coming retailers, as well as hotel companies as possible replacements. Simon told analysts on a conference call Thursday that they are also disposing under-performing assets, while putting Sears “in the rear-view mirror.”
According to Simon, the company will spend more than $1 billion in capital to redevelop the 33 stores it holds in its portfolio that either already closed or is expected to close later this year. Washington Prime Group who has 28 Sears locations within its portfolio that are headed out the door, says its distributing up to $325 million of capital to renovate them for new tenants. It also added it expects net operating income to decline nearly 2 percent in fiscal 2018, primarily due to Sears.
“The mall of the future doesn’t need five, six … department stores,” Simon said during an earnings conference call. “The ability to reclaim [those spaces] allows us to densify our properties. And I think we have that opportunity in a rather large scale.”