Why Kohl's Is Frequently Asked About The Potential For Store Closures--And The Plans For Its Real Estate

There is significant value in Kohl's real estate as evidenced, in part, by the strong tenant and user demand for the real estate of the 27 stores that the Company closed last Spring

Why do Wall Street and retail analysts frequently ask Kohl's KSS 0.00%↑ executives about the potential for store closures?

Probably for the same reason that legendary criminal Willie Sutton is alleged to have said to explain why he robbed banks:

“Because that’s where the money is”

Kohl’s owns the real estate for ~400 of its stores and ground leases—at low rents—approximately 250 additional sites.

It is hard to know for sure how much this real estate is worth.

But Kohl’s has purportedly received a previous bid of ~$2 BB in connection with a potential sale leaseback.

While Franchise Group had planned to finance its proposed 2022 purchase of the retailer by selling its real estate for up to $7 BB.

The reality is likely more complicated.

Values would likely depend on whether the Kohl’s real estate and leases are sold on a conventionally marketed basis, as part of a sale leaseback or in a distressed auction scenario.

And, of course, price and demand would fluctuate based on key real estate valuation drivers like location, market conditions and the proposed re-use of the properties.

However interesting data points are starting to emerge that might provide a value benchmark—at least for repurposes of Kohl’s property.

For instance last Kohl’s closed 27 stores last Spring.

Though just 2% of the ~1,150 total Kohl’s store base, it was perhaps the retailer’s most significant mass store closure event.

At least so far.

Rumors of additional Kohl’s store closures have circulated in recent months.

So much so that Kohl’s executives regularly address these concerns on quarterly earnings calls.

On last week’s Q4 2025 earnings call, CEO Michael Bender responded to an analyst’s question by commenting that over 90% of Kohl’s stores are profitable.

Though he indicated that the Company will continue from a "hygiene perspective" to manage its store base (whatever that means).

However Bender pushed back on whether there could be significant changes to the size of the Company’s store base.

But there may be good news if—and or when—Kohl’s changes its strategy and exits from a more of its stores.

That is because many of the sites that Kohl’s closed last year have been in high demand from other tenants and users.

Some former Kohl’s properties—such as those highlighted below—are being converted into non-retail uses:

• CJ Shaughnessy Crane, a mobile crane service operator, acquired the freestanding former Kohl’s store in Stoughton, MA for $18.5 MM (~>$200 per square foot); it plans to use the building for warehousing and storage.

• The Los Altos, CA School District is converting a former Kohl’s property in Mountain View, CA into a new campus for the Bullis Charter School, a development that has been long in the making. The Los Altos School District acquired a ~12 acre site in the San Antonio Shopping Center—which included the Kohl’s and adjacent Big Box buildings—in 2019 for $155 MM and finished its capital raise for the school campus in November 2024 after voters approved a $350 MM bond. The Kohl’s store and adjacent buildings are now to be demolished and replaced with new classrooms, parking and a four acre park with a track, soccer fields and a baseball diamond that will be available to area residents.

  

• A condo/hotel redevelopment is likely coming to a former Kohl’s in Napa Valley, CA; the “Kohl’s redevelopment project” is the most significant investment in Downtown Napa in over a decade and is to include a 161-room upper-upscale hotel with restaurant, retail, spa, banquet and ballroom space, and a 78-unit residential condominium

Many former Kohl’s properties, though, are expected to remain as a retail use.

Particularly as grocery stores.

At least 4 of the 27 shuttered Kohl’s stores are being repurposed for grocers including Sprouts Farmers Market SFM 0.00%↑, Whole Foods Market and Lidl.

Additionally, earlier this year Asian grocer H Mart announced that it plans to convert a ~100,000 square foot, 2-story former Kohl’s building in Fremont, CA into its largest U.S. grocery store.

All 27 of the Kohl’s stores that closed last year were leased.

So Kohl's did not obtain any economic benefit from the sale, re-tenanting or redevelopment of the real estate.

But the strong demand for this small part of the Kohl's store base may be a good sign to executives, creditors and investors that underwrite significant value in Kohl's dirt.