King of Prussia's old Sears auto store shows how sites are evolving

At King of Prussia Mall, two retailers are at an old Sears. Restaurants will open where the auto center was.

From repairing cars to serving steak.

The former Sears Auto Center at the King of Prussia Mall will open in the next few months as a Yard House and Outback Steakhouse, according to New York-based Seritage Growth Properties, a real estate investment trust (REIT).

It's part of a national trend by Seritage to "repurpose former Sears stores" as they close, alongside sister Kmart stores.

Last week, Sears Holdings Corp. announced that both Sears and Kmart would close another round of stores.

One reason: Not as many are needed because of online shopping.

Value fashion retailer Primark, out of Dublin, Ireland, and Dick's Sporting Goods took over the former Sears space next to the auto center last year.

Primark now occupies the first floor of the former 215,000-square-foot Sears department store. Dick's has most of the second floor.

Construction on repurposing of the auto center into restaurant space began in the first quarter of this year as "part of Seritage's strategic mission to unlock value in many Sears-owned properties across the country," said a company representative.

The move has pumped up revenue to offset an otherwise dismal balance sheet. Sears and Kmart, both value department stores, are in one of the most vulnerable sectors and are in the midst of disappearing, analysts say.

Last year, Sears Holdings sold 235 Sears and Kmart branded stores to Seritage as part of a sale/leaseback transaction. Seritage was created as a spinoff from Sears Holdings.

Last month, a report titled "Restaurants: Now Serving Retail Growth" by the business real-estate firm CBRE highlighted trends in 18 U.S. cities.

The report found that while Philadelphia's per-capita spending on restaurants is in the middle of the pack nationally, its growth in restaurant spending is among the highest in the nation, up 21.4 percent from 2011 to 2014.

Among the reasons cited for restaurants sprouting up at malls and shopping centers are that entrepreneurs see retail food and beverage as a wise investment and the recent high valuations of fast-casual chains. In the Philadelphia area, restaurants are also filling gaps left by struggling retailers.

"Restaurant growth is currently greater than retail store growth as a percentage of the overall development that we are seeing," said David Orkin, restaurant practice leader for the Americas at CBRE. "Many projects that previously may have been conceived for traditional retail are being adapted for restaurant, hospitality and entertainment uses.

"The King of Prussia trade area is very desirable for restaurants due to its great regionality and highway access, very strong daytime population, strong residential population (adjacent to the Main Line), over 3,000 hotel rooms, and the success of [KOP] mall and surrounding restaurants."

Seritage said Orkin is working on a number of such transactions around the country, including the restaurants at the old Sears Auto Center.

"The former Sears and Kmart boxes were developed many years ago and occupy some fundamentally great real estate that is being repurposed," Orkin said. "Restaurants are taking advantage of the opportunity to enter very mature, high barrier-of-entry markets."