With American shopping malls suffering from growing use of e-commerce by shoppers, store space that has been vacated by bankrupt retailers is being converted to space for other types of tenants. Among those new lessees are the logistics operations of the very e-commerce companies beating brick and mortar retailers into submission. CNBC’s Lauren Thomas reports:
An old Toys R Us store in Milwaukee is now home to Engine & Transmission Exchange, a remanufacturer for car parts.
Meanwhile, six dead malls across the U.S. are either in the process of being turned into or have been revamped as massive manufacturing plants and logistics hubs. The empty Euclid Square Mall in Euclid, Ohio, for example, is under construction to become home to a new Amazon e-commerce fulfillment center. And that’s after Amazon already moved into a new facility where Randall Park Mall used to sit in North Randall, Ohio.
These types of projects — converting a shuttered retail space into industrial complexes — have historically been hard to do, and are still somewhat rare to see through from start to finish, David Egan, head of the industrial and logistics research division at commercial real estate services provider CBRE, told CNBC. “That said, I think we will see more of it. [The trend] will grow slowly, but it will grow.”
CBRE found 24 such examples of properties across the country that were once home to retailers but now have turned — or are in the process of being turned — into a warehouse or some sort of supply chain center. Since 2016, at these 24 locations, 7.9 million square feet of retail space has been converted into 10.9 million square feet of industrial space. The second figure is larger because, in many instances, a developer will tear down the existing structure and build a bigger building on that dirt, said Lisa Denight, a research analyst at CBRE.
Read more here.