We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
Home » Retail-to-logistics conversions slow to take hold

Retail-to-logistics conversions slow to take hold

Repurposing malls, stores, and other retail spaces for sorely needed logistics operations gets a lot of hype, but not much action, real estate experts say.

Retail-to-logistics conversions slow to take hold
November 16, 2020
Victoria Kickham
No Comments

Growing demand for urban real estate to support last-mile logistics has given rise to all kinds of ideas for converting malls, department stores, and similar spaces into distribution centers, but so far the trend is slow to take off and has limited potential, according to real estate experts.

“I still feel like there’s a lot of talk on this, and not a lot of [action],” Carl DeLuca, vice president of Real Estate for DHL Supply Chain, said in an October interview about industrial real estate trends. He emphasized problems such as zoning and the high cost of converting space into usable logistics operations as some of the key challenges.

A research report from logistics real estate giant Prologis earlier this fall revealed similar insights. The research found that the retail-to-logistics trend is still in its infancy and will likely be a “slow rising tide” due to rezoning challenges and physical site limitations surrounding urban retail space, among other issues. 

Prologis estimates that retail-to-logistics conversions in the United States will amount to between 5 million and 10 million square feet per year—less than 1% of existing logistics real estate facilities and less than 10% of the logistics space needed to meet the incremental demand anticipated due to accelerated business trends related to Covid-19.

“... retail-to-logistics conversion rates will be low and time frames will be long,” according to the Prologis report, released in September. “The rate of conversion is likely to be the most active among malls, where supply is highest and the shift to online has been the most disruptive. Conversion among smaller formats is possible but will be comparatively rare due to competitive uses (retail or otherwise), site challenges, and local community preferences.”

Retail conversions are complex, but the challenges around them can be boiled down to four key areas, according to the report: 

Economic—including the high cost of converting retail space into logistics space as compared to repurposing into apartment buildings, for example, or re-tentanting as retail. Even though Covid-19 has hit the retail space hard, the next-generation use of vacant retail space is likely to be a new retailer, Proglogis said. 

Political—including restrictive zoning and community opposition to projects. Urban retail space is often located near residential space, further complicating the issue.

Physical—including poor reconfigurability of existing structures, inefficient site layouts, and space constraints; quite frequently, retail spaces just aren’t big enough to serve as DCs.

Legal—primarily because many parties often have a stake in the outcome. With malls, in particular, land is often controlled by multiple owners, which can make the process time-consuming and layered.

The trend is slow to take hold in other parts of the world as well. Jon Sleeman, lead director of logistics and industrial real estate research in the United Kingdom and Europe for commercial real estate giant Jones Lang LaSalle (JLL), says retail-to-logistics conversions are more common in large retail warehouse parks in the European market—the equivalent of U.S shopping centers anchored by “big box” stores or “superstores”near large cities and towns—rather than in malls or department stores. Sleeman notes that Amazon.com has purchased such space around London, primarily for last-mile logistics.

“The retail warehouse parks lend themselves a bit more to repurposing for logistics,” Sleeman said. “By and large, if you want to run a logistics operation you need to run out of  a warehouse. It’s really only in places where you can’t find the right location where you'd look at repurposing different kinds of facilities.”

Logistics Warehousing
KEYWORDS DHL Supply Chain JLL ProLogis
  • Related Articles

    Warehouse construction leads business recovery as e-commerce booms

    Johnson & Johnson ranks as top healthcare supply chain, Gartner says

    Late deliveries may cost retailers big

Victoria kickham headshot
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.

Recent Articles by Victoria Kickham

Transportation report: Rising fuel prices will drive higher costs

Logistics economy grew in March

Logistics economy grew in February

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Forecasts call for freight rate slumps in 2023

  • Projected U.S. recession in early 2023 will soften freight market

  • Inflation drops again as interest rate hikes hit home, NRF says

  • How to avoid the next crisis: A new approach to supply chain agility

  • New Jersey truck fleet says Freightliner tractors will deliver safety as well as freight

Featured Video

20221107korber large vs

Enhancing Customer Experience with Your Supply Chain Strategy

Viewer Contributed
With the rise of e-commerce, many businesses have had to transform their warehouses to handle online orders in addition to regularly scheduled inventory shipments. This means warehouses need more information than ever before to ensure they can meet customers' needs. As a result, companies need to select warehouse...

FEATURED WHITE PAPERS

  • Guide to Pallet Rack Safety

  • 3PLs: Complete Orders Faster with Flexible Automation

  • A shipper's guide to navigating post-pandemic holiday freight

  • THE NEW WAY TO WAREHOUSE: 4 Innovations in Automation & Robotics to Boost Warehouse Productivity

View More

Subscribe to Supply Chain Quarterly

Get Your Subscription
  • SUBSCRIBE
  • E-NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing