Massive Field Retail Transforms into Industrial Warehouses

Big Box Retail Transforms into Industrial Warehouses

Industry investors are looking for big box retail for warehouse supplies. According to a new report by CBRENearly 14 million square feet of retail space in the country has been converted into industrial space. This trend supports the growing demand for industrial space as e-commerce shopping increases.

“Lower demand for malls and large box retail, coupled with a shift in consumer buying patterns, has significantly increased demand for industrial and logistics space. As a result, private investors rate the highest and best uses of their real estate, which comes along with the escalation of industrial demand. " Matt, CBRE's Pacific Southwest retail leader, told Kurt StrasmannThe Pacific Southwest Industry Leader at CBRE agreed, adding, "The result is that many investors are pouring money into the potential repositioning of various types of retail property that could accommodate industrial uses."

Big box stores are the best candidates for retail-to-industrial transition projects. "The best candidates for potential remodeling are underperforming retailers with large boxes and lagging malls near neighborhoods to meet last mile delivery requirements," says Siegel.

These conversions are not easy. Retail – even a big box – has yet to change significantly in order to work for an industrial warehouse. “The perception of truck traffic is problematic, especially with objects close to population centers. Proponents of a conversion, however, point to a lower overall traffic. The zoning challenges for these conversions will vary from market to market, ”says Siegel. Strasmann adds, “Some of the biggest hurdles are zoning and trucking issues as many retail projects are adjacent to residential areas. The retail sector can also offer tax incentives to cities. "

So far, zoning has been one of the biggest hurdles in transforming retail into industry, but that's changing. “The local governments will see the reallocation differently. There are local governments that see repositioning as an opportunity for job growth. Local governments can capitalize on increasing online sales and persistent consumer behavior trends when shopping online, ”says Siegel.

Lack of retail demand has forced local governments to look for alternative uses for retail. "It was extremely difficult at first, but over time, and due to the lack of demand for retail reuse for growing vacancies, I suspect the restrictions will be reduced to allow for the opportunity for industrial repositioning," says Strasmann.


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