When will vacant SLO County Kmart get a new tenant — and who? Here’s what we know
After years of abandon, the wheels are finally turning on finding a new tenant to take over the long-closed Kmart store in Atascadero.
Located at 3980 El Camino Real, the empty building takes up half the real estate in a shopping center also host to a dance studio, a gym, a pediatric dentistry and a tobacco shop.
It’s the frequent subject of rumors in the community from residents hoping to see a new tenant take over the store.
Though Kmart moved out of the store nearly five years ago after declaring bankruptcy, the company held onto the lease — in violation of city code — in hopes of finding a sub-leaser up until a few months ago.
Now, the lease is up for grabs, and the property manager said several offers have been made by national retailers.
But it could still be a while before Atascadero shoppers see a new store up and running, and the vacancy has taken its toll on surrounding businesses.
“The city really, really wants this property to be revitalized, and there’s no reason it shouldn’t be,” Atascadero Community Development Director Phil Dunsmore told The Tribune.
Why has the Kmart stayed empty for so long?
After going bankrupt in 2018, Kmart moved out of the building in early 2020, along with 95 other stores shut down by their parent company, Transformco.
Only one Kmart store is still open in the continental United States in Miami, with its few other remaining stores located in overseas territories in the U.S. Virgin Islands and Guam.
When the Atascadero store closed, however, Kmart continued to pay rent on its lease until Oct. 1 without filling the store with a sub-leaser.
“It didn’t make a lot of sense,” property manager Jeff Mayhew of Strata Properties told The Tribune.
In fact, the extended vacancy violated Atascadero’s zoning code, which states non-residential developments larger than 50,000 square feet cannot hold onto an unused lease for more than 24 months. The approximately 80,000- to 90,000-square-foot Kmart held its lease for nearly twice as long.
The city has a vested interest in filling the vacancy to increase economic profit. While the city doesn’t receive lease payments on the privately owned property, it does profit off sales tax from shoppers.
It has also impacted neighboring businesses.
“The vacancy of that Kmart property led to the vacancy of the other surrounding tenants, because once you don’t have an anchor, you’ve got an empty parking lot, and the whole thing kind of falls apart,” Dunsmore said.
Kellie Hart owns 805 Movement and Performance Arts in the same complex.
She said the empty property invited vandalism, break-ins and crime to the complex, threatening her own and other nearby businesses. She had briefly moved her business out of the complex, and returned when it came under Strata’s new and improved management, she said.
“It’s been rough on us,” Hart said.
The lights in the empty Kmart are now left on around the clock to help keep the homeless population from breaking in and better allow the Atascadero Police Department to see inside the glass facade and keep an eye on the building, she said.
“It actually helps make it look like it’s alive, and it does keep down potential issues,” Dunsmore said.
Who might move into the old Kmart?
As of right now, its not clear who will move into the space — or when.
Mayhew said several national tenants have made offers, but he did not give any names or details so as not to compromise the negotiations.
He expects to have a lease secured within the next six months to a year, but then Strata will have to do renovations before the next tenant can move in.
“There’s a lot of repairs now that need to be done to the building because it’s been vacant for so long,” Dunsmore said. “There’s leaks and issues and stuff.”
Kmart repaved the back parking lot of the building as a part of the lease-end deal. Additional renovations could include construction of a new building, but its not for certain yet, Mayhew said. The front facade of Kmart will definitely be renovated, as well as the other shop spaces in the retail center, he said.
Transformco did not respond to The Tribune’s requests for comment for this story.
