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Amazon repurposing malls

Simon Property Group, the biggest mall owner in the U.S., has been in talks with Amazon to turn some of its anchor department-store spaces into Amazon fulfillment centers, according to the Wall Street Journal. For the e-commerce giant, more fulfillment centers near residential areas would speed up the crucial last mile of delivery. For Simon, turning over what was once prime mall space to fulfillment centers shows it would be willing to relinquish an essential way to bring in more mall traffic to secure a steady tenant.

  • Why it matters: A hookup between Simon and Amazon would show how retail and logistics — especially delivery for the critical last mile — are converging more rapidly. Amazon would likely use the department-store space for a smaller version of its huge distribution centers, relying on vans to navigate suburban streets.
  • By the numbers: Simon would likely rent the space at a considerable discount to what it could charge another retailer. Warehouse rents are typically less than $10 per SF, while restaurant rents can be multiples of that. Depending on when the leases were signed and their locations, department-store rents can be as low as $4 a square foot or as high as $19 a square foot. 
  • Worth Noting: Amazon has also been in talks with multiple mall landlords about putting its coming grocery-store chain in J.C. Penney locations. [WSJ]

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