Commercial Real Estate 101 

Shopping Malls Turned Warehouse? CRE Might be onto Something

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Over the course of the next few years, nearly 30% of all American malls are expected to close their doors and focus more heavily on online sales. It’s no big surprise that with the rise of offline to online shopping increasing at a fast pace, retailers are focusing their efforts on e-commerce business rather than the physical shopping experience. What’s to come of these empty shopping malls? New space for warehouses to launch e-commerce facilities.

More shopping center and mall spaces are being repurposed for industrial distribution as e-commerce begins to take market share from traditional brick-and-mortar retailers. A large amount of space is coming online as retailers continue to speed up store closures. This trend is having a major impact on both brick-and-mortar and online retailing. Brick-and-mortar retailers are converting their closed shops and repurposing the space in existing stores to serves as distribution centers. Online merchants such as StubHub are opening physical locations to expand their reach to customers to offer in-person pickups and returns.

Shopping malls that are located in affluent areas and high population density could be easily repositioned with additional delivery and pickup amenities. In areas where land is scarce, retailers who are looking to increase the speed of their delivery have considered warehouse space in former shopping malls located near residential communities.

Shopping Malls Turned to Warehouses

The site of the Dallas area’s first shopping mall is now a warehouse for packing shipments for FedEx. In the last ten years, more retail business has moved from storefront to online as consumers turn to the Internet to make purchases more often than they do the mall. As they say, clicks are replacing bricks when it comes to retail.

A proposed $177 million Amazon fulfillment center in Cleveland at the former Randall Park Mall site will take up 69 acres and is expected to give the old mall new life. Amazon has used a multitude of former mall sites as renewed spots for fulfillment centers. This is another example of how shopping malls turned to warehouses and distribution centers is a trend that the commercial real estate industry will continue to experience for years to come as shopping malls decline.

The L.A. Times published a recent report that said up to 25 percent of U.S. shopping malls may close in the next five years, creating ample opportunities for companies such as FedEx and Amazon to snatch up these spaces to use as warehouses and distribution facilities, since they will already be located in prime locations near neighborhoods.

Is CRE Onto Something?

As the retail industry shifts to more e-commerce driven sales, bigwig companies like Amazon are taking notice of the new space becoming available as malls die out. Shopping malls offer space and location many e-commerce companies are seeking out for their next distribution or warehouse facilities. The commercial real estate industry will continue to expand on this trend and bring new life to old shopping malls.

*Re-Printed with Permission from NAI Global.

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