Posted on June 6, 2019

With the current changing trends of e-commerce, the need for streamlined logistics has spiked demand for last mile distribution centers. To meet this need, companies are implementing distribution and warehouse strategies for vacant retail and other commercial property types. In the era where next-day and two-day shipping is the standard, retailers are faced with the challenge to either get creative with distribution or lose out on sales. As a result, retailers are turning to vacant retail redevelopments to create new, unique investment opportunities.

In just the past decade, several neighborhood retailers fell victim to the retail ruins. With a dense population of consumers and a steady workforce, these urban neighborhoods where stores like Sears and Toys “R” Us once sat, provide demographics that are ideal for last mile distribution.

Take Akron, Ohio for example. The Rolling Acres Mall has been sitting vacant since 2013. To meet the expectations of consumer delivery and take advantage of existing real estate, it’s been reported that Amazon is planning to build a 695,383 sq. ft facility in its place.

Like any transformation, there are challenges, especially with real estate. Zoning issues have prevented many commercial retail developments in the past, but, conversion from retail to industrial has shown to be very risky and quite time-consuming. It’s no secret that municipalities are eager to transform these vacant buildings in such a way that it will generate money. Officials in wealthy residential areas are still reluctant to change and are under the notion that these sites may be more suited to be re-tenanted with other retailers or transitioned to mixed-use and multi-family facilities.

Investors are finding a way around these challenges by looking to transitional and gentrifying urban areas that have retail spaces that have been vacant for a significant amount of time. Last mile conversions have and will continue to take place across the country and become increasingly popular as consumers continue to demand faster delivery times no matter if they are in Kentucky or NYC. As a matter of fact, since 2016, there have been 24 industrial redevelopments at former shopping centers or big box stores since 2016 with most happening in the upper Midwest so far.