Abandoned mall department stores could become Amazon’s next fulfillment centers

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One of the largest owners of shopping center real estate at United Stages, Simon Real Estate Groupdiscussed with Amazon the transformation of its flagship department stores into Amazon distribution hubs, according to the Wall Street Journal.

In the case of Simon Property, major tenants like JC Penney and sear that were once steady sources of income now hang around the commercial real estate manager’s neck, and turning their ghostly lobbies from pale mannequins into warehouses for Amazon orders just makes sense.

Turning the showroom into a warehouse for everything from books to sweaters to kitchen utensils and electronics won’t be too difficult for the vacant storefronts of the businesses that have both filed for protection against Chapter 11 bankruptcy.

Simon’s holdings include some 63 JC Penney stores and 11 Sears stores, according to the Journal report citing a May public filing from the property developer.

It wouldn’t be the first time Amazon had turned to commercial real estate for distribution centers. in 2019, e-commercer acquired a massive physical footprint in Akron, Ohio that it has turned into a distribution center.

Gone are the days of chewing gum-smacking tweens and teens and their beleaguered parents heading to the local mall for a stroll down the retail block. Now shoppers prefer to browse online and kids are finding Fortnite to be the hot topic hang on.

The deal, if done, would be another nail in the coffin for a staple of late 20th century culture that now exists primarily in the memory of baby boomers and Gen X consumers ( thank you millennials and Gen Z).

Shopping malls these days are lifestyle affairs that promise brand name boutiques rather than the sprawling department stores that had something for everyone. The big-box spaces the Journal reports Amazon is trading for are the multi-story 100,000-square-foot giants, which probably aren’t long for the long-tail world of niche commerce anyway.

Consumers today are looking for brands that appeal to a personality or the bottom line of a wallet, not the one-stop, mass casual counter of late 20th century department store identities.

The Journal reported that, if the deals go through, Simon would like to lease the space at a considerable price compared to what he would charge another retailer. The newspaper estimates that rents could be as low as $4 per square foot to $19 per square foot, while warehouse rents average around $10.

At this point, malls are looking for anything that can make money. They’ve tried schools, doctors’ offices, and seniors’ residences before, but the COVID-19 outbreak threw all those plans into the abyss.

And, as the Journal notes, malls are already located in locations that make them attractive distribution hubs. Amazon has already purchased some sites and fedex and DHL did the same, according to the newspaper.

At this point, Amazon ownership may be a better fate for real estate than abandoning it totally to empty space and persistence. 80s rock soundtrack.

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