From 3,000 to 2 Stores - What Happened To The Kmart Real Estate?
Roughly 3,000 Kmart stores have closed over the past few decades - but over 90% have been repurposed or redeveloped for new tenants or new uses
Kmart opened its very first store in Garden City, Michigan in 1962.
Over the next four decades Kmart constructed or acquired close to 3,000 stores.
The stores were large — they averaged 100,000 square feet — and located in urban, suburban and rural areas throughout the country.
Kmart opened its last new store in 2002.
But during the next two decades the Kmart real estate incurred multiple mass store closure events, two Chapter 11 bankruptcies, the acquisition of Sears and a spin of hundreds of stores into a new REIT named Seritage.
Today only two Kmart stores continue to operate in the United States — a full size store in Bridgehampton, New York and a downsized location in Miami.
So what happened to the ~3,000 Kmart stores that closed over the past few decades and the ~300 MM (!) square feet of vacant real estate that was left behind?
Many retailers moved in to fill the void that Kmart left in many communities:
For instance, Big Lots, Tractor Supply, and Hobby Lobby each now operate over 100 stores in parts of former Kmart buildings that have been remodeled and demised to accommodate multiple tenants.
Burlington Stores operates in a portion of ~90 former Kmart buildings and Ollie’s Bargain Outlet now operates at over 50 sites. Former Kmarts comprise ~10% of the entire current store base for these two retailers — and, according to Burlington’s CEO. represent some of its best stores.
At Home now occupies over 80 former Kmart buildings. In many instances At Home took the entire Kmart space with modest changes or improvements. A whopping 30% of At Home stores are located in former Kmart buildings!
Home Depot now operates stores at ~80 former Kmart sites throughout the country. Home Depot demolished the Kmart building at about half of these sites and built a new store on the premises. At other sites it modified and reused the Kmart building.
Target now operates at over 60 former Kmart sites and Lowes has a store at over 50 properties. Kohls and Kroger have also each taken over 45 ex-Kmart sites. In many cases these retailers have re-used all or part of the original building.
There are also plenty of non-retail uses at many former Kmart properties:
Portions of over 200 former Kmarts are now used as gyms and fitness centers (more than half of which are Planet Fitness franchise locations);
At least 45 Kmart buildings have been converted to churches. Another 40+ are now used as schools, career academies and vocational centers;
Over 200 Kmart properties are now used for self storage. U-Haul alone has converted over 115 of former Kmart sites to a storage use.
There have been noteworthy medical redevelopments at former Kmart sites as well.
Our firm — Grand Sakwa Properties — redeveloped and repositioned a former Kmart property in the Metro Detroit suburb of Plymouth Township for a health care use.
Although the Kmart building was demolished, Henry Ford Health constructed in its place a 120,000 square foot, multi-story medical center that offers primary care, specialty services, and a 24/7 emergency room.
Grand Sakwa also densified the site by constructing a ~10,000 square foot convenience retail center at the hard corner of the ~9 acre property.
As to unique conversions and adaptive re-uses of former Kmart properties?
Well there have been some of those as well.
Like the Kmart in Austin, MN, that was redeveloped into a corporate office building for Hormel Foods and initially housed a SPAM Museum to celebrate the iconic Hormel product (until the museum relocated in 2016).
Or the former Kmart in Traverse City, Michigan that was repurposed as the The Traverse City Curling Center, complete with multiple curling sheets and an insulated “ice shed” system that supports and maintains dedicated curling ice at the property.
And a former Kmart in North Hollywood, California that is being converted into a Tesla Showroom and Service Center.
Tesla is using all 117,000 square feet of the former Kmart building to include a complete collision center, paint booths and even a large indoor area dedicated to car delivery and customer pickup.
It is expected to open in Fall 2024.
Close to one-fifth of the ~3,000 original Kmart buildings were demolished.
Many of these former Kmart sites were redeveloped — some for other retail but at least 20 former Kmart properties now feature housing as a primary use.
Like a former Kmart site in St. Petersburg, Florida that was redeveloped into The Addison Skyway Marina, a 306 unit apartment complex.
And for those retailers looking for a new site — or those developers interested in taking on an interesting adaptive re-use project — there are still several hundred former Kmart buildings and sites that are vacant and awaiting redevelopment!