Houston is losing seven of its 10 stores while Dallas-Fort Worth area loses seven of its 16 stores. San Antonio will be down two stores, but left with four, including two Super Kmarts. Austin's trio of Kmarts will be cut to one. Meanwhile smaller Texas markets such as Victoria, Kerrville and Borger are losing their only Kmart stores. Kmart is awaiting bankruptcy court approval to shutter stores classified as underperformers, most of which are in leased locations.
How fast the stores find new tenants depends largely on the circumstances surrounding individual shopping centers and their local markets. San Antonio offers a perspective on what could affect interest in the properties.
Those in thriving retail areas like north central San Antonio could go quickly, Cale Hahn, research director for the Weitzman Group's San Antonio office, tells GlobeSt.com He says he's already fielded inquiries about the location of the Super Kmart along San Pedro Avenue (US 281), even though he's not representing the property. "It's a strong retail corridor," Hahn says, with a Sam's Discount Club across the street, several shopping nearby centers as well as an office-industrial park. "That's going to get gobbled up fairly quickly," he says.
Other stores, like the other San Antonio store on the closing list, might not be so attractive, such as the Bandera Festival Shopping Center situated near the busy intersection of Guilbeau and Bandera roads. Its problem: it sits back from the street. "It may be a different story," Hahn says, "because it's set so far back from being near a road on Guilbeau that the visibility from Bandera is poor." In a statement released Friday evening, Equity One Inc., the owner of the center, said its revenue from the accounts for about $530,000 or 0.5% of the company's annualized total revenues.
Weitzman's executive vice president in Dallas, Greg McDonald, deals primarily with retail big box dispositions. It's been his feeling, for some time, that the retail spots can be filled, but it will take time. Likely users are call centers, churches, office and perhaps even schools. Location, regardless of region, will dictate whether the vacant space will remain retail but under a different branding.
Houston already was positioning itself for the Kmart closings, according to statements in a recent report. Sassy Stanton, a retail specialist with the Houston office of Insignia ESG, wrote "the decline of Kmart will create new avenues and retailers to carry the goods manufactured for Kmart." In that same report, Simmi Jaggi Basri, vice president of the retail group with Houston office of CB Richard Ellis, wasn't quite so optimistic, writing that stores in less desirable locations will only serve to boost a "growing surplus of second-generation space." Empty Kmart, Service Merchandise, Albertsons and Disney stores in highly desirable locations "should quickly be re-leased, but the majority of them will not," he assessed.
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