The very thing that is killing the malls may help revive them: online retailing.
JLL offers that idea in an article on its website entitled, “Can online shopping help save malls? How landlords are making shopping centers part of the supply chain.”
The strategy is to combine the customer inventory warehouse space with traditional retail real estate.
“Retail owners are increasingly looking at micro-fulfillment centers and logistics nodes that can sit right behind stores,” JLL said. “The model puts click-and-collect, in-store shopping, and the fulfillment of online and pick-up orders in one place, located close to where people live.”
Brookfield Properties, Macerich, and Taubman are opening “technology-enabled micro-distribution hubs” at five malls. Simon Property Group, the mall management company, is also reworking several of its properties similarly, according to JLL.
“Our clients have been increasingly considering micro-fulfillment as a two-birds- with-one-stone approach: landlords need to fill vacant retail space and retailers need to get goods ordered online shipped to customers,” says Naveen Jaggi, president of Retail Advisory Services, JLL, Americas.
Grocery stores have been experimenting with this concept. But COVID-19 has broadened its value, according to JLL.
“Shopping centers are located right where people live,” Jaggi said. “They are likely to become an essential part of the supply chain.”
“Consumers now expect a near immediate click-to-door delivery speed, something that requires that fulfilment centers be close to home. Neighborhood shopping centers and malls are often already positioned as those sought-after last mile locations,” said Craig Meyer, president, Industrial, JLL, Americas. “The near-overnight increase in e-commerce due to the emergence of COVID-19 has shown us that being close to the customer is paramount.”
Total e-commerce sales could hit $1.5 trillion by 2025, which would increase the demand for industrial real estate to an additional 1 billion square feet, JLL predicted.
E-commerce has forever changed the way people shop.
“Now repurposing vacant or dark stores and mall space as micro-fulfillment centers will be an important component in re-imagining the U.S. retail footprint,” said Meyer.
Source: GlobeSt.
