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| Feb. 17, 2003 |
Big Box Replacements for Kmart Sought
by David Goll - East Bay Business Times |
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The Home Depot, Lowe's Home Improvement Warehouse and Target are all possible replacements for a Super Kmart store in Oakland that will close sometime in April.
The store at 4000 Alameda Ave. – just off busy Interstate 880 – is one of 326 Kmarts nationwide being shut down this spring in a second round of closures for the Troy, Mich.-based discount retailer trying to climb out of Chapter 11 bankruptcy by April 30. The company shuttered 350 "underperforming" locations last year.
Solomon Ets-Hokin, an agent for Terranomics, a San Francisco commercial brokerage firm specializing in retail properties, said the 17.8-acre site, with the 180,000-square-foot Kmart store that opened in 1995, will probably be purchased by a real estate investment trust that's negotiating for multiple locations vacated by Kmart.
"The site will likely go to a single-user retailer," Ets-Hokin said. "The most likely tenants would be The Home Depot, Lowe's, or possibly someone like Target. That particular location, given its size and visibility right next to the freeway, would be well-suited for one of those retailers."
Ets-Hokin said attempts to interest the owner of a glass bottle manufacturing plant into selling its adjacent 27 acres to make the site larger – suitable for a full-fledged big-box retail center – have been unsuccessful. But the smaller site is still marketable, he said.
"Lowe's, with its garden center, is just about the same size as the Kmart store, and the company doesn't have a store nearby," Ets-Hokin said.
Lowe's Companies Inc., which opened stores in Livermore, Union City, Hercules and Antioch in 2001, is still aggressively expanding to challenge its arch-rival, The Home Depot, according to Matt Van Vleet, a spokesman for the Wilkesboro, N.C.-based Lowe's chain. Now operating 860 stores in 44 states, Lowe's opened 121 new locations two years ago and 123 last year, he said. It will debut another 130 in 2003.
While Van Vleet wouldn't confirm whether Lowe's will definitely build at the Super Kmart site in Oakland, "it is a possibility," he added.
"We study hundreds of things before going forward with a new store, so it's really premature at this point to comment on a store at that site," he said.
Home Depot spokeswoman Kathryn Gallagher said her company has "always had a goal of opening a store in Oakland" and is scouting several sites.
The city of Oakland would certainly like a new tenant such as Lowe's, The Home Depot or some other big-box retailer, to fill the large gap that will be left by Kmart. Keira Williams, a retail specialist in the business development unit of the city's Community and Economic Development Agency, said the city, long considered "underretailed" by industry observers, would like more big-box companies to set up shop because they generate big sales tax revenues. But sites on which they could build are scarce.
"That's why the Kmart site is so valuable," she said. "It's one of the few large-scale sites left in the city for this kind of development."
That doesn't mean, however, that city officials blithely bid farewell to Kmart.
"We really worked with (Kmart Corp.) to keep that store open," Williams said. "This was not one of the company's underperforming locations, and we felt we'd made some strides in recent months in persuading the company to remain. Oakland was one of its more successful stores."
But when the store closure list was released last month, the Oakland Super Kmart was on it, as were other Bay Area stores in San Jose and Morgan Hill.
Kmart offered no explanation why the store is closing. There is no date set, but a Kmart spokesman said this week that it will likely occur during the first half of April.
City officials are now helping the store's 300 employees find new employment, Williams said, and looking to the future.
"A number of (big-box) retailers are interested, but we're still trying to determine how disposition of the site will be handled," she said. "It is perfect for big-profile retail, given its great visibility and good access to the freeway."
Although some of the neighborhoods in West and East Oakland are predominantly in the lower socio-economic category, some of those areas, including the largely Hispanic Fruitvale district, have been gentrifying in recent years, attracting a number of smaller retailers. And its affluent districts of Trestle Glen, Glenview, Rockridge, Montclair and others have residents with some of the highest levels of disposable income in the East Bay.
Another major attraction of the Super Kmart site is that tens of thousands of people pass by it every day while traveling I-880. Big-box retailers typically crave that kind of visibility.
"Throughout the East Bay, not just in Oakland, buildable land for retailers is becoming pretty scarce," Williams said. "Having it situated right next to a major transportation corridor is even more rare."
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