To absolutely no one's surprise, JCPenney announced earlier this month that it will close “underperforming” 33 stores (while still opening one in Brooklyn) this year.
The closures will result in a $65 million savings for the still-struggling retailer. And most observers expect that after a less-than-spectacular holiday season, many retailers will announce store closures in coming weeks.
The real question is what the landlords will do to replace this anchor or other major closures? With few department store opportunities left, some developers are getting inventive, including PREIT, which is losing a Penney at its Exton Square Mall in Chester County, PA. The project will be redeveloped when an existing Kmart location is recaptured in 2016.
"This is a tremendous opportunity for PREIT. Having control over the JCPenney and Kmart locations will allow us to reposition Exton Square Mall by capitalizing on the stellar demographic profile of the area, which is the best in our portfolio,” said PREIT CEO Joseph Coradino, in a press release. “PREIT has a strong track record of replacing department stores, having successfully replaced nine in the past nine years. We look forward to sharing the details of our plans for Exton Square Mall in the near future and demonstrating the value creation proposition this presents.”
But Exton Square could be an exception on Penney's list – it's located in an affluent area, and is nearly 95 percent occupied, according to the release. It recently saw the opening of a 32,000-square-foot health care center, a demonstration that developers must think beyond traditional retail to keep their projects leased. Of course, that's easier to do in a good center. Owners of B and C centers will have to work even harder.
Keep me posted.
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