The bankruptcy of Sears Holdings will lead to the closing of two of the three remaining Twin Cities Sears locations, one at Ridgedale Mall in Minnetonka and the other near the Capitol in St. Paul.
For decades the nation’s largest retailer, Sears will enter the restructuring process with just one full-line department store in the Twin Cities, at the Mall of America, along with an appliance outlet in Coon Rapids.
“It’s sad that Sears is in such difficulty,” Teresa Fleischhacker of Minnetonka said at the Ridgedale store Monday. She said she has shopped at the location since it opened as one of the anchor tenants at Ridgedale in 1974.
“My mom ordered stuff out of the catalog, and Sears was one of my first credit cards. But the store just didn’t stay in the race to keep up with the others,” she said. “They stopped innovating 20 years ago.”
Fourteen Sears Hometown stores in smaller cities around Minnesota are unlikely to close. Each is independently owned and chiefly sells non-apparel goods. Also remaining open are four Kmart stores in Minneapolis, St. Paul, International Falls and Rochester.
A leveraged buyout 10 years ago heaped billions of dollars in debt on Sears, creating a cumbersome obligation just as recession and internet-based retailing pulled customers out of its stores. Sales have fallen steadily since and CEO Eddie Lampert, whose hedge fund is the firm’s largest investor, for years has closed hundreds of stores and sold assets to outrun looming debt payment deadlines, including one that arrived Monday.
In the Twin Cities over the past two years, Sears closed stores in Burnsville, Coon Rapids, Eden Prairie, Maplewood and West St. Paul. In Burnsville, Eden Prairie and Maplewood, Sears was the original developer of the mall its store anchored.
There was no word when the stores at Ridgedale and on Rice Street in St. Paul will close, employees said Monday.
A privately run Driver and Vehicle Services office on the second floor of the St. Paul store will move, but details of when and where were still being worked out. “It’s pretty much up in the air right now,” said Josh Christenson, a counter manager at the license bureau.
Both the Ridgedale and St. Paul store sites hold enormous prospects for redevelopment, real estate agents and retail analysts said.
One likely suitor for the Sears space in Ridgedale will be Von Maur department store, which opened in Rosedale Center in Roseville last week. Von Maur wanted to stake a claim in Ridgedale back in 2013, but Nordstrom laid claim to an area that opened up after Macy’s consolidated two spaces at the mall.
“The Sears footprint is larger than what Von Maur would need, but it’s likely the owner could find a way to accommodate them,” said Jim McComb, a Minneapolis-based retail consultant. Ridgedale is owned by CBRE Global Investors and Brookfield Property Partners.
“Von Maur could be a tenant in Ridgedale and even Mall of America if Sears decides to close there,” said Dave Brennan, professor emeritus at the University of St. Thomas Institute for Retailing Excellence. “The company has speculated that they aren’t done expanding in the Twin Cities.”
Jim von Maur, president of the Davenport, Iowa-based department store, said in an interview earlier this month that he wanted more than two stores in the Twin Cities. In a statement Monday, the company said, “We are always exploring new locations. ... However, we have nothing to announce at this time.”
A scramble may ensue for the St. Paul site, adjacent to several state office buildings on the west side of the Capitol. Its huge size, 17 acres, could easily hold 1,500 apartment units at a time when the Twin Cities rental market is thriving and urban living is popular.
“The Sears store site is a key strategic property in the St. Paul area,” Bill Katter, president of United Properties, a major Twin Cities developer, said in a statement. “Its proximity to the new soccer stadium and other nearby expansion make it an interesting location for a variety of mixed-use developments.”
A decade ago, the property was envisioned in area plans for the nearby Rice Street light-rail station as a location for a “mixed-use urban village” similar to Wacouta Commons in downtown St. Paul.
In 2013, Sears proposed plans to the Capitol Area Architectural and Planning Board, which has zoning jurisdiction, to build townhouses, apartments and offices on the north half of the site and keep the existing store, but nothing materialized. Two years later, it sold the property to Seritage Growth Properties, the real estate investment trust that Lampert created to redevelop Sears real estate around the country.
Currently, the state Department of Administration leases 500 parking spaces from Seritage, according to Curt Yoakum, assistant commissioner for communications and planning. The lease goes through August 2020, he said, though both parties have the right to terminate it with 90 days notice. On Monday, Yoakum said Seritage had not contacted the administration department to request any changes to the lease.
If Seritage decides to sell the property, developers are likely to line up for it, said Lee Krueger, president of the St. Paul Port Authority, which purchased the former Macy’s in St. Paul and redeveloped it.
“It’s got great visibility. Light rail access is pretty close. You are close to the Capitol,” Krueger said, adding the authority would not likely have to step in. “I think it works for a lot of people and a lot of options.”
But there’s one restriction: height. The Capitol Area Architectural and Planning Board limits development to about six stories in the immediate area so that the Capitol remains the dominant structure.
The Sears bankruptcy marks the end of an era that began with Stewartville, Minn., native Richard Sears, who was born in 1863. As a young railroad agent in North Redwood, Minn., Sears came upon a shipment of watches that he resold, beginning his shift into the retail trade. In 1886, he created printed mailers to sell watches and jewelry.
After meeting Alvah Roebuck in Chicago, the pair started Sears, Roebuck & Co. in 1893. Three years later, Sears took his mailer to a new level by printing the first general merchandise catalog. With more than 500 pages, it became the tool that turned Sears, Roebuck into the nation’s dominant retailer for nearly a century.
Staff writer Emma Nelson contributed to this report.