South Coast Plaza is known for luxe shops, exclusive brands and fine dining.
It isn’t known for going-out-of-business bonanzas, fire sales of inventory and extraneous store property, or gaudy advertisements for those liquidation efforts. And it would like to keep it that way.
That’s the thrust of South Coast Plaza owners’ legal efforts to minimize the impact—and potential reputation damage—of Sears Holdings Corp.’s forthcoming closure at the tony Costa Mesa mall, Orange County’s largest shopping center by sales.
Recent court filings related to Sears’ well-publicized bankruptcy show the mall’s landlord is fighting to control the manner in which the estimated 240,000-square-foot Costa Mesa Sears winds down operations at the 2.7-million-square-foot center. It joined with several other owners of malls affected by Sears closures in making its case for discretion.
The landlord has a “primary interest in maintaining an aesthetic appearance in the shopping centers for the benefit of all tenants, especially during the holiday season,” the company said in an Oct. 22 court filing.
That means “no flashing lights, strobe lights, large spotlights, vehicle advertising, bullhorns or any type of amplified sound” in advertising the Sears closure, the landlord argued.
Tethered balloons, sandwich boards, sign spinners, exterior banners and rooftop advertising also should be off limits, South Coast’s legal representatives wrote.
In addition, “there should be no distribution of handbills, leaflets, or other written materials outside the premises, or other advertising on landlords’ property,” the court documents argue.
Don’t expect to see sidewalk or tent sales, either, or any other sales of Sears merchandise outside the store, the landlord said.
South Coast representatives made the requests in a joint filing with four other owners of high-end mall properties with impending Sears closures: Santa Monica-based Macerich Co., Dallas-based Centennial Real Estate Co., C.E. Johns Co. of Vancouver, Wash., and New York-based Brixmor Property Group.
Centennial and Brixmor have holdings in OC, but none are directly impacted by the Sears closures.
The court hadn’t acted on the requests of South Coast Plaza and the other landlords as of press time.
The department store appears to be abiding by South Coast Plaza’s request.
Store closing signs were put up at the Coast Mesa location last week, but only one notable banner was placed on the outside of the store itself.
The interior of Sears was packed throughout with going-out-of-business advertisements, although the entrances to the building—particularly the interior entrance that leads directly into the main part of the mall—was relatively understated in terms of that type of advertising.
The roughly 40,000-square-foot Forever 21 store, which initially subleased its space from Sears, appears to be on safe ground.
The fast-fashion retailer is looking to hire at the Costa Mesa location, according to signs at the store.
125 Layoffs
Hoffman Estates, Ill.-based Sears announced plans on Oct. 15 to close the South Coast Plaza location and 141 other underperforming Sears and Kmart stores across the country as part of its bankruptcy structuring efforts; the struggling retailer had about $5.6 billion in bank and bond debt at the time it filed for Chapter 11 protection.
The legacy South Coast Plaza anchor store had been widely expected to close, bankruptcy or not, since affiliates of C.J. Segerstrom & Sons bought back the Sears space last year for $187 million, and leased it back to the retailer for an undisclosed period.
The bankruptcy case is being overseen in the Southern District of New York, which along with Delaware handles most of the country’s larger corporate bankruptcy cases.
Ballard Spahr LLP, which has an office in Los Angeles, is representing South Coast’s owners in the case.
A time frame for the South Coast Plaza location closure wasn’t disclosed in court filings.
State employment records showed last week that Sears plans to lay off 125 employees at the location, effective Dec. 31. It’s unknown if that represents Sears’ entire workforce at the mall.
Employees at Sears told the Business Journal last week that they’d been told to prepare for an end-of-December closure, though that could be pushed to mid-January.
South Coast Plaza representatives have declined to comment on the Sears proceedings outside of the recently filed court documents. They’ve also declined to comment on site redevelopment plans.
