Walmart Inc. has spent $118 million this year to buy three shopping centers, joining a trend of retailers becoming landlords rather than just tenants.
In August, Little Rock-based Dillard’s Inc. partnered with Trademark Property Co. of Fort Worth, Texas, to buy the 646,000-SF Longview Mall in east Texas. Dillard’s has a store in the mall, but instead of paying rent, the real estate-savvy department store chain will now be collecting.
Neither Dillard’s nor Trademark Property publicly announced the sale price, and a Dillard’s spokeswoman declined to comment.
In January, Walmart, through a company called South Saturn Ridge LLC, spent $34 million on a mall in Monroeville, Pennsylvania. It has more than 100 tenants and features a JCPenney, Macy’s and Barnes & Noble.
Walmart hasn’t said publicly what it plans to do with the center, but South Saturn Ridge said in an application for a $7.5 million state grant that it plans to turn the Monroeville Mall into a “modern, mixed-use destination.”
By acquiring shopping centers, retailers gain control of the property and tenant mix, retail analysts told Arkansas Business. And rent collection gives the store chains another revenue stream.
Trademark and Dillard’s said they would invest in the Longview Mall “and enhance its position as a community hub for shopping, dining, and entertainment,” Terry Montesi, founder and CEO of Trademark, said in an August news release.
By owning the Longview Mall, Dillard’s can protect its store there, according to Rudy Milian, president and CEO of Woodcliff Realty Advisors LLC of Woodcliff Lake, New Jersey. Milian’s firm provides management consulting for shopping center companies, retailers, commercial real estate organizations and investors.
Mall buyers sometimes avoid investing in renovations, Milian said. “They just want to milk it for what it’s worth, and then they sell the land when they’re done.”
But that’s not the expected future for the Walmart and Dillard’s properties.
Walmart hasn’t laid out extensive plans about what it will do with the Monroeville Mall. But South Saturn Ridge said in the grant application that it plans to demolish the 1.1 million-SF mall and rebuild it at the 186-acre site.
“Construction will include approximately 780,000 square feet of new retail, restaurant, and entertainment space, supported by new landscaping, pedestrian-friendly design, and public open spaces of community use,” the filing said.
Construction is scheduled to begin in April 2027, and completion of the project is expected by mid-2029.
Milian noted that Walmart has been in the real estate business for a long time, owning its own stores and parking lots. As of Jan. 31, Walmart owned 6,039 retail locations in the U.S. and internationally and it leases 4,732 more.
Dillard’s also owns many of its stores. As of Feb. 1, the department store chain owned 248 of its 272 locations.
The Monroeville Mall plan is unusual in that Walmart plans to redevelop the entire property, “and obviously they’ll have a store there,” Milian said. “But in addition to that, they’re going to be building apartments and other things to improve that shopping center.”
And the Pennsylvania property is just one of Walmart’s recent real estate purchases.
In September, Walmart spent $44.5 million on a 165,409-SF outdoor center in Norwalk, Connecticut. Walmart is an anchor store of that location, which also has tenants such as Aspen Dental and Just Salad.
“The amount of interest in this center was substantial. With several options to consider, Walmart stepped up with the best overall offer,” Jeff Kintzer, principal of Royal Properties Inc. of Bronxville, New York, said in a news release. He represented the seller in the transaction.
In May, Walmart spent $39.6 million on the Bethel Park Shopping Center in Bethel Park, Pennsylvania. The nearly 22-acre property includes a Giant Eagle supermarket.
Walmart told Arkansas Business in an email that it regularly evaluates “areas for growth to better serve our customers. These purchases provide opportunities to serve new communities and are not part of a pilot but are one-off projects intended to complement our existing store footprint.”
Becoming the owner of the shopping centers means retailers can lease space to other businesses, “sometimes competitive, sometimes complementary competition, but they gain the value of improving the real estate,” Milian said. The retail property owners also receive rental income.
Owning the shopping center also allows the retailer to control the entire customer experience, said Dominick Miserandino, CEO of Retail Tech Media Nexus, an online service that connects retail, media and technology specialists. Walmart now can determine how the entire center looks and approve of the events held at the grounds, he said.
“Whatever customer experience they want, if they own the entire shopping center, they can control that whole thing,” Miserandino said.
Jonathan Zhang, associate professor of marketing at Colorado State University, said he thinks that Walmart, not a property manager, will handle the management of its newly acquired properties.
“Given the amount of money and effort going into this kind of acquisition, if I were Walmart, I would make sure the management team is in-house,” he said. “Because then the management communication, execution, everything is aligned with the corporate strategy.”
Zhang also said that he thinks that Walmart is buying the shopping center real estate to secure “infrastructure back home for the future of retail.”
Buying the retail center gives “Walmart flexibility that leasing could never do,” he said.
He said the move is similar to Amazon’s purchase of Whole Foods Market in 2017. “Essentially, Amazon bought Whole Foods and its logistics sites,” he said. That purchase allowed Amazon customers to pick up and return their items at Whole Foods.
“So I can see the same thing with Walmart,” Zhang said. “Walmart wants to provide convenience for shoppers to drop off things and pick up things, and the centers will also act as a physical location, like micro-fulfillment hubs.”
In addition to buying shopping centers, Walmart has been remodeling stores for the future of shopping. In January 2024, Walmart said it was planning to build 150 stores. It also said that it was planning to remodel 650 stores across 47 states and Puerto Rico.
“Our new and remodeled stores will reflect Walmart’s Store of the Future concept, featuring improved layouts, expanded product selections and innovative technology to help our associates better support our customers and make shopping more convenient and enjoyable,” said John Furner, president and CEO of Walmart U.S. The company announced he will replace Doug McMillon as CEO of Walmart on Feb. 1. “These new and remodeled stores will better enable us to meet and exceed customer expectations whether in a store, online at Walmart.com, or through one of our mobile apps,” Furner said.
Signaling a greater emphasis on technology, Walmart announced on Nov. 20 that it was transferring its stock exchange listing on Dec. 9 from the New York Stock Exchange to the Nasdaq Global Select Market, which lists many tech companies.
“Moving to Nasdaq aligns with the people-led, tech-powered approach to our long-term strategy,” John David Rainey, Walmart’s chief financial officer, said in a news release. “Walmart is setting a new standard for omnichannel retail by integrating automation and AI to build smarter, faster, and more connected experiences for customers, while enabling our associates to deliver even greater value at scale.”
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