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J.C. Penney in West Lebanon to close, leaving another huge vacancy on Route 12A

  • Cathy Morin, of Holderness, N.H., returns to her car after checking to see if JC Penney, in West Lebanon, N.H., was open Friday, June 5, 2020. Morin and her husband had not been to the Upper Valley Plaza in over three months, so they called ahead to see if the store was open and an automated message listed temporary hours of noon to 2 p.m. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Maria Nunez, of Fitchburg, Mass., holds a sign announcing a liquidation sale at Kmart in West Lebanon, N.H., Friday, June 5, 2020. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Valley News Business Writer
Published: 6/5/2020 6:13:09 AM
Modified: 6/5/2020 9:25:49 PM

WEST LEBANON — The Route 12A shopping strip has suffered a 1-2 punch.

One week after Kmart revealed it would close its store, J.C. Penney has announced that its store in Upper Valley Plaza will be among the 154 stores the bankrupt retailer would close permanently amid the financial fallout from coronavirus.

The back-to-back closings of two storied names in American retailing leaves two football field-size storefronts needing new tenants at a time when retail chains — already challenged by the shift to online shopping — are being hammered by the COVID-19 pandemic.

Kmart, which opened in the Kmart Plaza on the north side of Interstate 89 in 1976, and J.C. Penney, which opened in Upper Valley Plaza on the south side of I-89 in 1977, are both victims in the collapse of their financially troubled parent companies. Each was hobbled by bankruptcy as consumers for decades edged away from traditional department stores in favor of trendier boutiques and online shopping.

Systemic problems in brick-and-mortar retailing were then worsened by this spring’s recession and mass layoffs triggered by the coronavirus pandemic, which has led families to pull back spending on apparel and household items, the principal products sold by J.C. Penney and Kmart.

“It’s a huge hole,” Lebanon Mayor Tim McNamara said of the vacancies. “But retail was already shaky before COVID-19.”

McNamara, who grew up in West Lebanon, recalls when the shopping plazas were still farm fields; J.C. Penney’s location was previously occupied by now-defunct department store chain W.T. Grant.

Upper Valley Plaza, which opened in 1969, has been a passing parade of stores ever since — there was once even a multiplex movie theater in the shopping center — none of which are around any longer.

Going to the cinema and shopping for school clothes weren’t the only things you could do at Upper Valley Plaza, however.

“I got my driver’s license in 1972 at the New Hampshire DMV office, which was near where Five Guys is now,” McNamara said.

The two huge vacancies — the Kmart store is 106,000 square feet and J.C. Penney is 64,000 square feet — come as empty storefronts have cropped up in nearly every strip mall along the Route 12A corridor in West Lebanon. One store after another has closed and not been replaced.

The most recent departure was home decor retailer Pier One Imports in the Staples shopping center. The chain’s parent company filed for bankruptcy in February and said it will liquidate.

Some retail spaces, such as those once occupied by Radio Shack, Sears and Payless Shoes, have remained vacant for years.

Perhaps an indicator of things to come, when the Shaw’s supermarket closed in the Upper Valley Plaza in 2013, the building remained vacant for more than five years before owner WS Development secured tenants to divide the structure into four units for stores: PetSmart, HomeGoods and Old Navy and the restaurant 110 Grill.

Kmart Plaza is owned by Boston-based commercial real estate developer The Davis Co., which acquired the property along with Route 12A’s North Country Plaza, home to Panera Bread, and Lebanon’s Miracle Mile Plaza in 2017 for $27.2 million.

Grafton County deed records show that Chestnut Hill, Mass.-based commercial real estate developer WS Development leased Upper Valley Plaza until 2018 when it acquired the property from the executors of an estate for an undisclosed sum, but Lebanon City records show that the 29-acre, 266,000-square-foot property is assessed at $38 million.

“The owners of these properties are substantial companies, and I don’t think they’ll be under any financial distress to do anything immediately,” said Jim Ward, a Plymouth, N.H., commercial restate broker who has handled real estate transactions in West Lebanon. “It could take years to turn them over.”

With the list of potential retailers who require tens of thousands of square feet short and growing shorter, some commercial real estate brokers suggest the J.C. Penney and Kmart spaces could be leased for new purposes.

“There is a huge need for warehouse space,” said Cam Brown, a longtime Upper Valley commercial real estate broker with Lang McLaughry Commercial Real Estate in West Lebanon. “We had a lease all ready to go for 17,000 square feet in Canaan and the next thing I knew (another tenant) took it.”

Lebanon’s McNamara said that, given the state of the retailing industry, he would expect wooing a national retailer will be tough.

“I don’t think we’re going to get a Macy’s. I don’t think a lot of retailers are going to be opening big new stores,” said McNamara, the associate director of facilities operations and management at Dartmouth College.

Although as sales professionals they tend to be optimistic by nature, real estate specialists nonetheless said they expect that new tenants can be found for the J.C. Penney and Kmart spaces.

“I think owners of these centers might see opportunity to replace these stores with healthy retailers,” such as Target, suggested Chip Brown, a commercial real estate broker whose firm’s signs are familiar on building in Hanover.

Besides, the demise of J.C. Penney and Kmart should surprise no one, Brown said via email.

“Kmart and Penney’s have been on life support nationally for a long time. The fact they stayed open as long as they did is actually a testament to the strength of the 12A market ... My bet is we will see better retail players fill the openings,” Brown said.

Contact John Lippman at jlippman@vnews.com.




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