Expert: Saks Global Bankruptcy Part of Retail Real Estate Evolution
How landlords are adjusting to the changing landscape when department stores are no longer guaranteed traffic drivers.
The Chapter 11 bankruptcy filed this week by debt-ridden Saks Global Holdings LLC isn’t an anomaly. It’s part of an ongoing evolution of retail real estate, according to Peter Braus, president of Lee & Associates NYC.
Braus said the bankruptcy filing by Saks Global, the parent company of high-end retailers such as Saks Fifth Avenue and Neiman Marcus, highlights a structural shift in how retail works and how real estate is valued.
“Large-format anchors are no longer guaranteed traffic drivers, and landlords have been adjusting to that reality for some time,” Braus told Commercial Property Executive. “What we’re seeing now is the legal and financial system catching up to changes that have already been happening on the ground.”
While rumors about Saks Global’s financial troubles were flying for several months, the luxury store conglomerate filed for bankruptcy protection late Tuesday. The announcement came after Saks Global secured approximately $1.8 billion in “debtor-in-possession” financing to operate the company and strengthen the balance sheet while the process unfolds under new management. Geoffroy van Raemdonck, who previously served as CEO of Neiman Marcus Group prior to its acquisition by Saks Global in 2024, was tapped this week as the new CEO.
The luxury store conglomerate, which was formed just about a year ago in a $2.7 billion deal, appeared to be collapsing under the weight of about $2 billion in debt from the deal. The company fell behind in payments to vendors and missed a $100 million December debt payment. Sales were declining amid increasing competition from other high-end retailers, including luxury brands with their own stores and websites.
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Braus said that’s a trend that has been unfolding for years as traditional department stores began losing market share as consumer behavior changed and online shopping grew.
“At the same time, luxury brands increasingly want to sell directly through their own stores and digital platforms,” he said. “What replaces department stores isn’t a single concept—it’s a mix of smaller footprints, more curated retail, food and beverage, entertainment and mixed-use environments that give people a reason to be there beyond shopping alone.”
Possible impacts for landlords
As the proceedings play out, Saks Global as well as the bankruptcy trustee and courts will be evaluating the company’s portfolios and focusing on ways to maximize value for creditors, Braus noted. The company operates about 70 full-line luxury locations and owns or has ground leases on about 8.4 million square feet of U.S. real estate holdings and investments. That includes 33 Saks Fifth Avenue stores, 26 Neiman Marcus locations, two Bergdorf Goodman stores and 77 Saks OFF 5th locations.
As long as stores stay open, there won’t be an immediate impact. But if leases are rejected and space is handed back, landlords will be forced to rethink how these large-format boxes work in today’s market. Options could include breaking up the spaces and bringing in non-traditional uses like experiential dining, entertainment, fitness or other traffic-driving concepts. However, Braus said most landlords will be waiting for clarity from the courts and trustee on which stores might be shuttered before making any major moves. They could also see co-tenancy clauses triggered if an anchor goes dark and other tenants reassess their positions, he noted.
While sale-leasebacks may be an option in some cases, Braus said it would not be surprising to see well-capitalized owners and groups like Simon and Brookfield acquire certain sites and reposition them as modern retail, mixed-use, entertainment-driven projects, or other uses.
“In some markets, the land itself is the real value,” Braus said.
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