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Distribution Centers Could Take Up Unused Retail Space

 November 18, 2020 |  CRE News, Investment, Management |  real estate trends, business tips, building renovation

Online shopping has only become more popular within the last year, with nearly 88 percent of the U.S. population made an online purchase at least once. Over the course of the next four years, experts predict that approximately 280 million people will utilize online shopping. With that much growth in such a short amount of time, distributors are looking for new solutions to get their products to consumers faster.

Amazon Leading the Way
Amazon has been a leader in innovation for years, so it comes as no surprise that they’re making headlines once again. Simon Property Group is reportedly in discussion with Amazon to convert empty retail spaces into distribution centers. Up to 80 stores with an average size of 100,000 square feet could become massive fulfilment centers. These larger warehouses will have the capacity to store even more merchandise, and with locations around the U.S., they could help cut delivery time down significantly.

The Pros
Along with quicker deliveries, putting in distribution centers can provide other benefits. The first is that utilizing available spaces prevents shuttered retail buildings from falling into disrepair and ultimately being destroyed. Another positive is potentially steady foot traffic for any remaining adjacent retail spaces.. Not only will big sellers be able to open another stream of revenue, but struggling businesses may get a much-needed boost from warehouse workers. Plus, large distribution centers add hundreds of new jobs to local economies.

The Drawbacks
There’s still much to consider when going from shopping to shipping. Zoning is a concern since most malls aren’t designed for the amount of heavy traffic that comes with distribution centers. Trucks coming and going can turn an otherwise quiet street into a busy, gridlocked highway, deterring shoppers. Lastly, enovations can come with a high price tag.

Overhauling Retail Space
Speaking of renovations, it takes more than a few to get a retail space ready for shipping. The majority of retail centers have a small number of docks, meaning new ones will need to be built to accommodate for the influx of vehicles. Retail flooring and asphalt generally aren’t constructed to withstand warehouse machinery and will need to be reinforced. Warehouses also require higher ceilings for shelving than are typically found in retail buildings.

Impact on Property Value
Some experts have warned about the hit you could take transitioning a retail space to a warehouse. According to Barclays, less than 20 percent of conversions hit that profit sweet-spot. A 60 to 90 percent loss is a major risk for investors and can make them wary to move forward. Mixed-use buildings do provide a better outlook, but it can still be tricky. Even if there is a return, it could take years for it to materialize.

Commercial Continually Changing
From showrooms to groceries, commercial retail property owners are looking for any possible way to revive their buildings. Amazon breaking into the sector is big news, but it may take some time for it to become a top trend. There will most likely be growing pains until the right balance can be found between storage and shops. As thousands of stores continue to end business, new ideas will keep popping up on how to rejuvenate the once profitable venture.


Contact National Property Inspections for Your Building's Inspection Needs
With offices in 49 states, NPI has local licensed inspectors available to assist you with your commercial property needs. To find an inspector near you, call our National Accounts Department at 1-800-333-9807 ext. 30. For more information, visit

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