The developer only needs to make small changes to the interior and of course add racks, shelving, pallets and the proper technology. The building features allow for easy application to a warehouse. “Our research shows that big-box stores make the most sense for a warehouse conversion,” said Walaszek. He said that on the demand side, the fundamentals are there for the conversion of functionally obsolete shopping centers to a more productive use. “In the U.S., there is about 23 square feet per capita of retail space compared to 17 square feet per capita in Canada and 4.6 square feet per capita for the U.K.” is over-retailed compared to other countries,” he said. Walaszek said he sees more mall-to-warehouse conversions coming. This retail-to-industrial activity, however, is definitely a niche market that is healthy and growing.” “Compared to the overall warehouse/industrial inventory, which is 14 billion square feet of space in the U.S., these conversions are a mere drop in the bucket. “When we started this study, we didn’t anticipate that we would find so many projects,” said Matthew Walaszek, a CBRE senior research analyst specializing in industrial and logistics.
These projects are turning roughly 7 million square feet of aging retail space into 10 million square feet of new warehouse/industrial space, either by converting existing structures or by demolishing and replacing them with new buildings. Retail-to-Warehouse ConversionsĪccording to January 2019 CBRE research, there are at least 23 retail-to-industrial projects that have commenced since 2016. One solution for underperforming malls is converting them into warehouses and distribution centers to fill the demand for last-mile delivery from e-commerce players and surviving brick-and-mortar retailers. These malls now need to be repurposed, perhaps as educational institutions, medical facilities, offices and/or housing. Some of those malls were built in areas of the country that today do not have enough foot traffic to survive as originally configured. Most chose to open stores, which in turn spurred the development of new shopping centers and malls. According to Ray Hartjen, director of marketing for RetailNext, a retail analytics firm in San Jose, California, brands that wanted to expand into new markets in the 1970s and 1980s had three main choices: create a catalog, build a call center or open a new store. While the media focuses on retail store closings and the demise of brick-and-mortar locations, smart developers and mall owners at top-tier properties are working to replace bankrupt anchors and those oh-so-yesterday mall concepts with restaurants, experiential venues and, yes, new retailers.įor other malls, however, replacing failed anchors and shuttered stores has been more difficult. When other efforts to resuscitate a dying shopping mall fail, converting the facility to a warehouse or last-mile distribution center is an option to consider.
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