Commercial real estate has been seeing the emerging trend of retail to warehouse spaces. These types of projects are becoming increasingly popular throughout the country because of the dramatic shift in the retail industry in recent years. Malls have been closing throughout the United States as the shopping habits of consumers have changed. In fact, it’s estimated that thousands of malls will close within the next ten years. While there hasn’t been an enormous spike in the development of warehouses in their place, property owners have been adjusting to manage the ever evolving environment of retail.
As malls are closing left and right there will be a plethora of commercial real estate properties opening up, many of which measure highly in square footage. Many consumers have begun relying on online shopping and delivery services instead of going to physical stores. By transitioning malls to warehouse centers the speed of delivering goods can be increased. This is especially true in areas with a high population density or affluent influences. Warehouses could also offer pickup amenities for those in a hurry.
E-commerce driven sales have created a need for more distribution and warehouse facilities. Already, major companies have been noticing the available spaces left after a mall closes. Amazon, Fedex and other organizations can find great opportunities in these spaces since malls are usually in prime locations. In Cleveland, 69 acres that included a former mall has been purchased by Amazon, bringing new life and job openings to the old area.
The push for warehouses taking the place of old malls does come with a few obstacles. Retail properties will have to be rezoned as industrial-types and often times there is higher value in retail assets. Because industrial assets are valued lower, those who’ve lent money toward properties may pushback. Furthermore, sales, income, and property taxes are all generated by malls. Industrial buildings don’t bring in nearly as many taxes. This is another area that may face pushback from surrounding communities. Regardless of these hurdles, warehouse spaces are expected to continue growing as the need for industrial space increases.
However, there are still shoppers who feel it’s important to have a physical store when shopping. This brings another option to the table. There will undoubtedly be a huge number of malls closing in the coming years. Surely, not every space will become a new distribution center or warehouse. Instead, types of lifestyle centers may also begin popping up. Commercial real estate has also seen a big increase in mixed-use spaces. These spaces create a “live, work, play” combination. People want to be engaged while spending money thus, indoor-outdoor areas have become popular.
These lifestyle centers include retail stores, restaurants, office spaces, and condos all within walking distance of each other. Consumers enjoy the ability to walk outside and grab coffee, shop, and pick up groceries all within a close range. As more people move into the suburbs, the accessibility and feel of living in a dense community can be recreated by these mixed-use centers. An old mall brings the perfect opportunity to invoke that sense of closeness.
So whether a warehouse or lifestyle center, the empty lots left after a mall closes are sure to see rejuvenation if commercial real estate developers continue to seek out these great conversion opportunities.