Sears Is Turning Shuttered Stores Into Data Centers

miller60 writes "Servers may soon fill the aisles where shoppers once roamed. Sears Holdings is seeking to convert former Sears and Kmart stores into Internet data hubs. Some stand-alone stores and distribution centers may be repurposed as data centers, while mall-based stores can be converted into disaster recovery sites, the company says, offering access to stores and eateries for displaced workers who may be on site for weeks. Then there's the wireless tower opportunity. Seventy percent of the U.S. population lives within 10 miles of a Sears or Kmart store, and these rooftops can be leased to fill gaps in cell coverage. It's not the first effort to convert stores into IT infrastructure, as Rackspace is headquartered in an old mall, and companies have built data centers in malls in Indiana and Maryland. But Sears, which operates 25 million square feet of real estate, hopes to make this strategy work at scale." Also at Slash DataCenter.

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[Aryden]

Actually it's because of leases. Generally, when an "anchor store" such as sears, belk, etc move into a mall or strip mall, they sign 10-30 year leases on the space. Unlike your general inline stores which sign 6 month, 1 year or variable lease agreements. They have to pay that lease out whether they maintain the store or shut it down. In many places, it is generally cheaper for them to vacate the store and just continue paying the lease without supporting the store itself. I see this as a way for them to continue to honor their lease while being able to generate revenue from it. Additionally, the costs for build a datacenter would be cheaper because you already have loads of parking, electrical infrastructure, security (joke) etc.

Old news

[onyxruby]

Retailers have been doing this kind of thing for many, many years. The first indoor big box shopping mall every built (Southdale) was built just to have a place to attach a Dayton's store too. I got my start in IT in operations for a large retailer, working with the real estate team in setting up and closing down store properties was part of my job. Many retailers have as much business in real estate as they do in retail and this has been the case for years.

By way of point Home Depots are often located near Target or Walmart since they buy large tracts of land for their stores and as a defensive measure to keep the other companies store from being put up nearby. They then use the best space for their own and develop strip malls around their property. When they have a lot just the right size for a big box retailer they will lease it to someone like Home Depot just to keep the land from being used by the competitors as many cities have will build taxes for unused property.

McDonalds has been known to buy a large tract of land and build a strip mall just to ensure that they get a restaurant in a prime location. When stores closed down the realtors then find other uses for the store. This is something that the retailers have been doing for decades with professionally run and managed real estate companies that they own. There are even special tax exemptions to allow these operations with special discounts.

When Icahn wanted to do a hostile takeover on Target a year or two back his highest priority to get in - sell their property off for great profit - and get out. The only thing that is new about this case is that Sears wants to get into the data center hosting business. If they bring in professionals (which the article says is exactly what they are doing) to run it there is no reason that you couldn't see Sears do very well in a very short time doing this.