Sonoma County retail sector strong enough to withstand departure of Sears
Another retail behemoth with a storied history is about to close its doors this holiday season in Santa Rosa.
However, the closure of the Sears department store at the Santa Rosa Plaza will come at a time of relatively healthy occupancy levels overall at Sonoma County's shopping centers. And since Sears has been floundering and shutting stores for years, its departure isn't expected to put a big dent in the local retailing sector.
Nationally, experts are predicting one of the better holiday sales seasons of the past decade, despite the swift pace of closures of national brand stores. Many are watching how U.S. shopping centers will reuse the open space and adapt to the shrinking of Sears, long one of the nation's top retailers.
“We don't think Sears will be around a lot longer,” said Steve Jellinek, a vice president for Morningstar Credit Ratings. “Basically it's going to be hard to turn it around.”
The Santa Rosa Sears store is expected to close around the end of the year. The company didn't respond to requests to provide a specific closing date. But the local store is filled with signs proclaiming discounts of up to 50 percent off the lowest prices and “ALL SALES FINAL.”
Santa Rosa's two enclosed malls, the downtown Plaza and Coddingtown off Guerneville Road, are two of the county's highest-profile shopping venues. Each sits near Highway 101, and both already weathered a closure of a major department store.
The Great Recession contributed to the end of Mervyn's at the Plaza in 2008 and Gottschalks at Coddingtown in 2009. The latter preceded the departure of a half-dozen smaller stores from the same mall.
In that period of economic duress, U.S. holiday sales were either in decline or flat. Store owners complained that business then was tough no matter where you set up shop.
In the ensuing years, Coddingtown began a continuing remake of the shopping center. It has ringed its exterior with Whole Foods Market, Target and Nordstrom Rack, as well as Chipotle Mexican Grill and BJ's Restaurant and Brewhouse. The center is now preparing a store for Ulta Beauty and another unnamed tenant to add to its exterior. There's also room for at least one more retailer on the Coddintown's outer ring.
Inside, the center still has more than a dozen vacant spaces. Mall owner Codding Enterprises is planning to undertake an inside renovation next year, according to a company statement.
Meanwhile, the Plaza downtown signed Forever 21 clothing store to take up the first floor that Mervyn's vacated 10 years ago. The second floor of that building remains vacant, and now the mall is facing another 60,000 square feet of empty space when Sears eventually leaves.
Simon Property Group, the Plaza's owner and one of the nation's largest shopping center owners, declined a reporter's request to discuss the future of the Sears property. That store property is owned jointly by Simon and Seritage Growth Properties.
“We have nothing specific to announce at this time, and we are still considering different redevelopment programs for this space at Santa Rosa Plaza,” a Simon spokeswoman said in a statement.
Retailers comprise a significant part of the county economy. Together, they employ more than 25,000 workers, or about 12 percent of the workforce. The retail sector's total payroll was $824 million in 2016, according to a new draft report provided by the Sonoma County Economic Development Board.
Despite the longterm challenges the two Santa Rosa malls face, the area retail outlook is mostly upbeat this holiday season.
David Codding, who with his wife, Melissa, owns Santa Rosa's Montgomery Village Shopping Center, said his staff is preparing for what “probably will be one of our best seasons ever in the shopping center.”
Through September, sales at the shopping center along Farmers Lane have increased 12 percent from the year before, Codding said. One new retailer, Soft Surroundings, opened in April and is “doing more sales than any other women's apparel store we have ever had at the Village.”
Rhonda Deringer, a partner in the Keegan & Coppin commercial real estate company, said the county's retail sector appears stable. She said the vacancy rate ended the third quarter at 3.9 percent of total retail space. For the same quarter in 2009 during the downturn, the vacancy rate was 9.2 percent.
Keegan & Coppin said the county has 18.6 million square feet of retail space, including 960,000 square feet at Coddingtown and 695,000 square feet at the Santa Rosa Plaza. While significant, Deringer said other cities built far more retail space in decades past and now find themselves more vulnerable to national brand store closings.
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