Big Box in French-Speaking Maine Auctioned for $210K

With fewer than 4,000 residents, the French-speaking town of Madawaska, in the northernmost part of Maine, isn’t exactly a retail haven.

When one of the town’s only stores, a Kmart, closed following its parent company Sears’ bankruptcy in 2018, the property sat vacant for four years. Seritage Growth Properties, a big box REIT handling the divestment of Sears and Kmart stores, had been successfully selling off many of its boxes, but was left with this outlier without much potential.

The property wasn’t in good condition; it had been an eyesore in the town for years. The Atlantic Retail brokerage, which had sold several former Sears and Kmart stores throughout New England for Seritage, wasn’t sure where they’d get a buyer in such a remote corner of the U.S. or what they’d even do with the asset.

“This was probably the only trade that’s happened in Madawaska in the last 15 years,” listing broker Sam Koonce told LoopNet. “We told them, ‘You should seriously entertain just giving the property back to the town.’”

But before succumbing to the idea that the 55,000-sqaure-foot dark Kmart wasn’t worth more than a donation, they took it to auction.

What came as a surprise to the brokers and the seller was a swift bid that worked for all parties. And now that a buyer has snagged the former Kmart for just more than $200,000, the French-speaking retail desert may see a new shopping destination in its place after years — giving a whole new meaning to the big box retailers’ slogan, “love where you live.”

It was a challenging sale, Koonce explained, given a general lack of investment interest in the location. “But knowing that the Ten-X process is rigid, we decided it was worth the effort to see what we could get in an auction,” Koonce continued. “If we hadn’t gone through that process, a [traditional] sale would have required a lot of hand-holding and it probably wouldn’t have ended up going anywhere.”

On the auction block, all due diligence on the asset was sorted out up-front, he said, and the property started attracting interest from investors as far as the West Coast. Ultimately, a buyer from the southwest landed on a bid of $210,000, and the deal closed in August. The buyer couldn’t be reached.

At some point since the Kmart closed, the town had taken back the parking lot on the site by eminent domain, Koonce noted, so the buyer of the building must work closely with the municipality to address circulation and parking for the property. But, without the auction process, Koonce said, the property likely never would have found a buyer willing to turn the property around.

As of December, Atlantic Retail still hadn’t heard any confirmation of what’s to come for the site, but the firm did connect the buyer with an interested representative from a big chain discount store. The two parties are likely discussing either a teardown and rebuild, Koonce said, or a mix of a dollar store with a balance of other uses for the remaining space.

And given his projected financials for a new deal with the credit dollar chain, Koonce said, the buyer stands to make a decent return on his investment. Dollar store properties are usually long-term, single-tenant net lease deals in which the tenant pays most, if not all, operating expenses. Since the onset of the pandemic, dollar store real estate demand has soared. The stores were considered both convenient and essential during lockdowns, which fueled scorching sales growth. The demand has since eased, but still continued growing to this day. Dollar stores led retail foot traffic gains for most of 2022, according to a CoStar report in August.

Dollar store chains have found success in rural areas where big box retailers haven’t, said Peter Keith, senior analyst for Piper Sandler, according to a recent National Association of Convenience Stores report. Discounters such as Dollar Tree and Dollar General are driving demand for medium to larger retail spaces according to Brandon Svec, National Director of U.S. Retail for CoStar Analytics.