Amazon In Talks With Simon To Turns Malls Into Distribution Centers

Amazon could fill the nation’s shuttered anchor stores as the pandemic contributes to the death of brick-and-mortar retailers.

Simon Property Group, the nation’s largest mall owner, has been negotiating with Amazon to transform some of its vacant department stores into fulfillment centers for the world’s biggest eCommerce company, The Wall Street Journal reported, citing sources.

If deals can be made, it would solve the Indianapolis, Indiana-based retail real estate investment trust’s problem of what to do with abandoned stores and provide Amazon with much-needed distribution hubs.

The two companies are considering converting former occupied JCPenney and Sears stores into Amazon centers, according to WSJ.

It’s not clear how many stores Amazon is considering, and it’s also possible the two sides could fail to reach an agreement, WSJ reported, citing sources.

Simon malls have 74 JCPenney and Sears stores, according to the company’s most recent filing with the Securities and Exchange Commission.

Last month, PYMNTS reported the U.S. will need 1 billion additional square feet of warehouse space by 2025 due to the fast growth of eCommerce, citing a report by real estate consultancy JLL. eCommerce sales in the U.S. totaled $602 billion last year and are expected to grow by at least 20 percent this year. By 2025, the survey predicts, eCommerce sales in the U.S. could reach $1.5 trillion annually.

“To replace department stores, mall owners considered schools, medical offices and senior living,” Camille Renshaw, CEO of B+E, a Chicago-based commercial real estate investment brokerage firm told WSJ. “With the current pandemic, industrial is the only thing left now.”

The location of malls near major highways and communities makes them attractive places for housing and fulfillment centers, WSJ reported. Still, there are other options. Simon is also considering other concepts for its vacated giant spaces.

In related news, Sycamore Partners is seeking to buy JCPenney for $1.75 billion. If the deal is signed, Sycamore would combine the iconic retailer with the Belk department store chain.