Some US malls now double as e-commerce fulfillment centers. Changes brought by the pandemic and growing e-commerce have prompted many shopping center owners to convert some space into fulfillment centers, taking advantage of large parking lots and loading docks.
A prime example of catering to ever-growing customer demand while keeping costs down lies in the real-estate space for retailers. To fill the rising gaps in shopping malls, many mall owners are converting the empty spaces into fulfillment centers for shipping out orders.
Underperforming retail sites have become an ideal location for last-mile warehouse developers. They are often located within population centers, connected to utilities, and have ample parking lots with multiple points of ingress and egress. Many are also freestanding big-box stores with existing dock doors and clear heights compatible with industrial use. Those without compatible design formats are typically demolished and replaced with modern warehouse facilities.
The next decade will see a shift in fulfillment practices as companies continue to utilize mall spaces for shipping orders. Large retail stores will also dedicate square footage to act as micro-fulfillment centers. Projects are underway to convert approximately 14 million sq ft of retail space into 15.2 million sq ft of industrial space. According to CBRE, 59 such projects have been completed, proposed, or underway since 2017.
Simon Property Group a real estate investment trust that owns 119 traditional malls and 69 premium outlets in the United States – is offering its spaces to serve as mini-fulfillment centers to various companies, including Amazon. It is unclear, however, if Amazon is utilizing the mall space for fulfillment needs ever since both companies put it on the table in 2020, according to Nasdaq. DHL and FedEx also consider utilizing mall spaces as their last-mile delivery centers. Costco and Target also use large mall retail spaces to fulfill their online orders.
Many companies are shipping orders from their retail stores to cut down costs and utilize the existing space. Considering a large portion of their inventory sits in their retail stores, it makes sense that companies such as Target, Walmart, Walgreens, and CVS now ship orders to consumer’s homes from their stores.
With the ever-expanding world of e-commerce and fierce competitors like Amazon, utilizing store space for shipping orders to customers is a smart move. It promises faster delivery times and is cost-effective compared to managing a warehouse.