Pleasanton JCPenny could close after more than 40 years

As mid-tier department stores struggle, new owner could reposition site

300 Venture Group Jerry Hunt with JCPenny at Stoneridge Mall
300 Venture Group Jerry Hunt with JCPenny at Stoneridge Mall (Goolge Maps, LinkedIn, Getty)

The JCPenny department store located at the Stoneridge Mall in Pleasanton might close its doors after Danville-based 300 Venture Group purchased the building, according to the undisclosed seller’s representative Nicholas Bicardo, vice president of retail capital markets at brokerage Newmark. Financial terms of the purchase were not disclosed.

The store, occupying a 156,000-square-foot property, is an original anchor at Stoneridge and has been there since it opened in 1980. The more than 40-year tenant could be on its way out soon, with the buyer still determining the best course of action.

“The property allows the investor the optionality to either operate it under a long-term lease or terminate the lease and reposition the building/site into an alternate use or retailer(s),” Bicardo said in an email to TRD.

Bicardo speculated that Venture Group will ultimately decide to transition the building to something else.

“It all comes down to what one’s investment strategy is. … For a more passive buyer, getting a single-tenant long-term lease at an elevated cap rate could be very attractive,” he said. “For a more proactive buyer, which this is the case here, repositioning the box at the current land basis looks very attractive.”

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Venture Group could make its decision based on recent trends that show mid-tier department stores struggling due to the pandemic and inflation. Consumers that regularly visited department stores in the past turned to online retail shopping during the pandemic, according to a 2022 U.S. Department Store Market Report.

The shoppers who returned to stores as they opened back up have favored top-tier stores over mid-tier stores. Shoppers are valuing consumer experiences that the higher-tier stores offer, according to the report. A more concerning trend for retail stores is that younger consumers are not frequenting retail stores as much as their older counterparts.

Inflation has altered consumer spending habits and they are prioritizing essential purchases over discretionary spending. According to a report by brokerage Marcus & Milichap, consumers have scaled back on purchases of clothing and home goods, while focusing more on daily necessities and dining.

“Well-located, necessity-centric retail properties that exhibited resilience during the health crisis should appeal to a broader buyer pool,” the report said.

Recent East Bay transactions have confirmed the move towards essential purchases. The Bridgeside Shopping Center in Alameda went for $574 per square foot and is anchored by grocery and dining services. Meanwhile The Bayfield Shopping Center in San Leandro went for $71 per square foot and has a majority of department stores.

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