Amazon circling around disused malls and stores for fulfilment centres
Amazon looking to capitalise on rise in vacancies and lower rents
The growth of e-commerce because of the Covid-19 pandemic is pushing supply chain companies to grab warehousing space where they can find it, particularly in areas of high population density. Typically, e-commerce needs three times the amount of warehousing space required by traditional brick-and-mortar inventory.
Amazon is reportedly in talks with Simon Property Group to take over mall spaces in America that have been left vacant by the closure of department stores.
At $4 per square foot, mall space is relatively cheap and not going up in light of lowered consumer demand as the pandemic continues to affect footfall. Warehousing space averaged $6.30 per square foot according to JLL’s Q2 industrial property report. Therefore turning store space into “online fulfilment centres” offers significantly discounted floor space in urban areas with large parking facilities and customer density.
However, department store layout may present a challenge as multiple floors are not conducive to Amazon’s automation systems. The company may also face difficulties caused by zoning laws in suburban areas by which trucks cannot enter during certain hours of the night or times of day. Typically, this is not a problem for warehouses or industrial locations.