Kmart’s Troubles Raise City’s Hopes of Razing Vacant Store

After waiting nearly a decade for Kmart to reopen a vacant storefront, Lake Forest city officials are finding a silver lining to the giant retailer’s bankruptcy: Maybe the boarded-up building and its crumbling parking lots can finally be plowed under.

The closed store sits in the heart of the town’s urban core and has long been seen as a key to slow-moving redevelopment efforts along El Toro Road. The retail district near the San Diego Freeway is now dotted with closed businesses and clogged with commuter traffic.

While industry experts say there soon may be hundreds of vacant Kmart buildings scattered across the country, possibly flooding the retail market in some areas, the long-vacant location in Lake Forest could be snapped up quickly.

“We do have people who are very interested in buying that site for development,” Lake Forest Mayor Richard Dixon said last week. “The only thing standing in the way has been Kmart and what they want to do. But my gut feeling now is that Kmart would be happy to unload that property.”

Kmart has been negotiating with the city to reopen the store but has never submitted final plans. A Kmart spokeswoman said it’s “too early” to say what the company might do with the property.

The corporation has said it is seeking court approval to terminate leases on stores--perhaps more than 300--that have already been closed. But the Lake Forest property is unique because Kmart owns the land.

“We’ll be reviewing whether or not we’ll be moving forward with that project,” said Julie Fracker, a spokeswoman at Kmart’s corporate offices in Troy, Mich. “But we’re on a fast-track plan, so we would probably be making decisions on properties like that very soon.”

City officials want to revive the beleaguered stretch of El Toro Road between the San Diego Freeway and Jeronimo Road by creating a pedestrian-friendly commercial district with upscale shops and restaurants. The city has a $9-million state grant to cover street improvements.

Progress has been made with other landowners and leaseholders along El Toro. The Westrust Corp., which holds the lease where the largely vacant Saddleback Valley Plaza sits, hopes to demolish the 270,000-square-foot mall and replace it with a new shopping plaza called the Orchard.

Like other shopping centers in the area, the plaza has been battling high vacancy rates and business turnover for years. Westrust hopes to break ground by the end of the year, company President Charles Smith said. Construction would take about 18 months, he said.

Dixon said he hopes Kmart officials make a quick decision so that construction in the area can coincide

“This is one of those odd situations where it’s obviously extremely unfortunate that Kmart has filed bankruptcy because it’s going to have a big impact on employees and investors,” Dixon said. “But in our case, it’s a vacant building. In a way, that’s kind of good news because now maybe something will finally happen there.”