Re-Purposing of Retail Premises for Warehouses

In the USA empty retail stores and shopping centers are increasingly being converted into warehouse and e-commerce distribution centres.

So, states the global industrial real estate firm CBRE, which examined in detail two dozen such projects ranging from southern California to Baltimore. Such is the rise in demand for ecommerce warehousing.

The report covers 24 retail-to-industrial projects that have commenced since 2016, turning 7.9 million square feet of retail space into 10.9 million square feet of new industrial space, either by converting the existing retail structure or replacing it with new industrial construction on-site.

CBRE found a surprisingly wide variety of retail-to-warehouse conversions. The projects include the total demolition of obsolete malls to be rebuilt as warehouses in Baltimore, Atlanta, Chicago, Detroit and several markets in Ohio (David Sparkman, Material Handling and Logistics, 4th February 2019).

It is a trend being replicated in the United Kingdom, driven by Brexit and market forces. In the UK, Rhiannon Curry of the Telegraph stresses that urban logistics space is in such short supply that developers could turn retail parks into warehouses, as residential schemes gobble up other available sites. Changing consumer habits and the growth of online retailing has driven huge demand for warehouse space in urban areas in the last few years.

A report from Deutsche Bank said such is the demand for land that traditional industrial parks and retail parks could be re-purposed for warehouses for online giants such as Amazon and delivery companies such as DHL which take parcels to customers.

These online shops and third-party logistics companies are:

 “ … vying for urban logistics space in an environment where industrial land is being lost to residential use,” the report said. Land has become too expensive for many logistics schemes because of the demand for sites for new homes.

Matthias Naumann, head of alternatives strategy at Deutsche Bank, said:

“Residential development is a strong competitor to logistics, and over the last 10 or 15 years the total amount of industrial land has been in decline.”

He said that demand for, ‘last hour’ logistics sites were likely to grow, especially in more regional centres such as Bolton and Warrington, as people demand faster delivery times for their goods. In an example of this earlier this year, Tritax acquired a decommissioned power station in Dartford and plans to turn it into a distribution centre to serve London.

Turning retail parks into warehouses could have the added benefit of taking space from high street brands such as furniture shops which are looking to reduce their store sizes.

“Under-utilised retail assets such as certain shopping centres, retail parks, business parks, supermarket premises, inner city office space and car parks could potentially be used for the storage and distribution of goods to proximate companies particularly as industrial space within city limits becomes increasingly constrained,” Deutsche’s report added.

Investors who might want to have industrial properties on their books could also, “purchase with the intent to convert”, the report suggested, as the sector increasingly becomes a target for institutional money.

Savills said that the trend would only accelerate as sales from events such as Black Friday, which is traditionally focused on bricks-and-mortar shops, increasingly shifted online.

Naimartens of Martens Companies (23rd October, 2018) explained that warehouse space is shrinking into smaller shallow bay buildings to accommodate in-city deliveries and distribution. Could some of these stores help fulfil the last mile and warehousing issues online retailers are experiencing? i.e larger Toys R Us premises. When Toys R Us went into liquidation in the U.S. a similar thing happened.

If you are in need of more warehouse space in the UK, with or without the capital, to maintain or increase your business capacity, then the solution is Whichwarehouse.

Whichwarehouse specialises in sourcing warehouse space and logistics services within the UK and Ireland. Contact us for any requirements relating to storage, fulfilment and distribution.  We even have access to industrial properties that are available for rent (short and long term) as well as office space on site (at some locations) so you can be close to your products but still being able to concentrate on other aspects of your business such as sales, marketing and procurement.

Whichwarehouse was originally set up to provide an online advertising directory for warehouse operators/warehouse owners/landlords etc to advertise their properties on an industry-specific portal. We realised that there was a niche in the market whereby we could match manufacturers and suppliers requiring storage and distribution solutions to those warehouse owners/3PL providers who had the available space and value-added services required. Thus our matching service was integrated into our advertising package, this having proved to be very successful.

The Whichwarehouse directory has an established network of experienced and professional third party logistics and warehouse providers covering locations throughout the UK and Ireland. We can assist with your logistics requests for anything from self-storage to pallet or bulk storage through to a complete supply chain solution for your products, even delivering to the end user. The facilities included in our network provide storage and distribution services for general and bulk goods, hazardous and pharmaceutical products, items subject to Duty and VAT deferment as well as general self-storage units.

Some of our members are able to offer a complete commercial storage and logistics solution including distribution and forwarding, RH&D, order picking, stock control, re-working and re-kitting, EDI (Electronic Data Interchange) and PDI (Pre-delivery inspection). Some also have available outside space for vehicle parking or external storage requirements and many warehouses have dock levellers, temperature control facilities, operate forklifts and most warehouse facilities are fully secure with CCTV and alarm systems.

If you need to find storage space or a 3PL provider please click on the FIND SPACE button on our welcome page and use the map to search for current available solutions or for assistance in any way, please contact us on 0800 1707555.

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