Outside the south Minneapolis Kmart -- yes, that Kmart -- a massive sign on the wall advertises what sounds like an insane seasonal deal.
"Holiday BOGO," the sign says. It's storewide! Every-damn-thing in the Kmart is buy one, get one.
Though Kmart is extending this deal to the people of Minneapolis, the store cruelly did not see fit to offer it to the city itself. In fact, the deal there looks more like "BOGN": Buy one, get none.
On Monday, the city finalized its $8 million purchase of 10 W. Lake St., an address that represents the land under the Kmart store. The seller was one Lawrence Kadish, of Long Island, New York, a real estate mogul who sounds like a real delight.
The land deal means the city of Minneapolis, long vexed by the existence of this unfortunately placed Kmart, can finally get down to the business of being vexed by the existence of this unfortunately placed Kmart.
"Will things look different any time soon?" says David Frank, director of city planning for Minneapolis. "The answer is no."
What Monday's purchase does, Frank says, is "create certainty" that someday the city will own both the land and the Kmart -- which it will immediately set about bulldozing, in order to reconnect the southern stretch of Nicollet to its hoppin' Eat Street neighborhood. The Kmart store interrupted Nicollet in 1977. If absolutely nothing goes right, it could be there for nearly 40 more years.
The company's lease doesn't run out until 2053, and Sears Holding Company, Kmart's parent, has shown little indication it wants to sell unless the city gives it a very sweet deal. When the city made a bid last summer, Minneapolis offered to subsidize construction of a new Kmart on the same site -- this time, without blocking the street -- and guaranteed the company would pay "below-market rent," Frank says.
The response from Sears/Kmart, per Frank, was that they "are not prepared to pay any additional rent beyond what they pay today." So, like, nothing: Kmart's building is fully amortized, so to meet its counter-offer, the city would "basically have to build them a new building for all but free," says Frank. "It was one of those very clear moments, that, this isn’t going to work. We were millions and millions of dollars apart."
Minneapolis subsidizes lots of real estate ventures it determines are in the city's best interest, and will even get creative with "unusual deals" when the circumstance calls for it, Frank says. But the city does not generally help corporations build a store, then just hand over the keys and say thanks.
Now seems like a good time to remember with whom one deals when dealing with Sears Holding Company: Eddie Lampert, a billionaire ex-Wall Street wiz kid who knows next to nothing about retail, and a lot about making Eddie Lampert money.
Or at least saving his bottom line. As the holding company's Sears and Kmart profits have dwindled, Lampert has cut a series of complex deals, sometimes with himself on both sides, to wring the last drops of coin from the corporation's thousands of stores... even if the stores themselves are losers. (Most are. Have you been to the Mall of America Sears lately? Has anyone?) The best asset they've got? Real estate.
Sears and Kmart stores (and their massive surface parking lots) sprung up on big-city and suburban properties throughout America over decades, and now occupy acres of space developers (public and private) would love to reimagine. And Sears/Kmart knows it, so it holds out for the best deal. Minneapolis wants that Kmart torn down... but how badly?
You've been warned, Minneapolis. Be on the lookout for a bad offer from Kmart. Meanwhile, we do recommend that storewide buy one, get one. Now that's a bargain.
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