CBL & Associates recently redeveloped a vacant Sears store at Fayette Mall in Lexington, Kentucky, into a total of 20 new inline retail tenants totaling 115,000 square feet (sf) of former Sears space, including a two-level 23,000 sf H&M as well as a Michael Kors and Brighton Collectibles. In addition to redeveloped retail space, two new mall entrances — one flanked by restaurants with outdoor dining — were added, featuring restaurants including The Cheesecake Factory. In a similar fashion, CBL subdivided a former 182,000-square-foot Sears store at the CoolSprings Galleria in Franklin, Tennessee, into smaller spaces that are now leased to American Girl, H&M and The Cheesecake Factory.

Simon Property tore down a Nordstrom and Saks Fifth Avenue at the Florida Mall in Orlando and replaced the building with a newly constructed Dick’s Sporting Goods and a crayon-based family attraction called the Crayola Experience. The area formerly occupied by Saks Fifth Avenue was carved into space for American Girl, H&M, Forever 21 and Zara.

Retail real estate trust PREIT had three Sears stores close in malls that it owns. PREIT has leased all of the nearly 400,000 sf of vacated space. CEO Joe Coradino said the tenants that are moving in, such as the Dick’s Sporting Goods and Field & Stream in Capital City Mall in Pennsylvania, will pay more in rent and drive more interest than Sears.

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In completing property diligence, we discovered that the Dover property was formerly a single-tenant Lowe’s Home Improvement Center. As we often hear with “big box” single-tenant retailers such as Lowe’s, Wal-Mart and K-mart, Lowe’s packed up at the end of its lease and headed down the street to a larger building. Often in these cases the former building sits vacant for a long period of time before reuse. Sometimes the building never finds a new purpose.

So it was nice to find out about a successful redevelopment of a former single-tenant building. After Lowe’s moved, the owner had the property rezoned from single-tenant retail to multi-tenant retail and secured new ten-year leases with Best Buy, Michael’s Stores and Office Depot. The owner then sold the successful redevelopment to our borrower in 2005.

Our diligence also discovered another successful redevelopment in the Dover market, just down the street. The former North Dover Walmart is being redeveloped into Dover Towne Center. This redevelopment has seen strong demand, with preleasing that includes six national tenants and Outback Steakhouse on a pad site. Ross Dress for Less, Petco, Shoe Carnival, Ulta Beauty and Five Below have signed leases at the new Dover Towne Center. All of the leases range between 10 and 20 years, plus options for extensions.

“These discoveries during diligence were great testament to the strength of the Dover retail market, which allowed for strong competition by CMBS lenders to provide the financing for these properties,” said Michael D. Sneden, Executive Vice President at ValueXpress.

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