Retail Spaces Get a Second Life as Industrial Hubs
As the commercial real estate (CRE) market adapts to shifting demands, industrial space is surging in value while many traditional retail properties struggle to stay viable. One of the most significant emerging trends is the transformation of retail spaces into industrial warehouses and logistics hubs. Driven by the e-commerce boom and the growing need for efficient last-mile delivery, developers and investors are increasingly repurposing underutilized malls and big-box stores, unlocking their hidden potential for modern supply chain operations.
The pandemic accelerated the decline of traditional retail, with many department stores, strip malls, and big-box retailers closing their doors permanently. Meanwhile, industrial real estate has been thriving, as companies require more distribution space to meet growing online shopping demands. This shift has led to an increase in retail-to-industrial conversions, particularly in urban and suburban areas where land availability is limited.
A recent report from CBRE found that over 10% of former retail space in key metros has been repurposed for industrial use, with cities like Chicago, Atlanta, and Dallas leading the way. By repurposing vacant retail properties, developers can provide last-mile fulfillment centers, micro-warehousing, and urban logistics hubs, all of which cater to the modern supply chain.
Many vacant big-box stores and shopping centers are strategically located near major highways and dense population centers—which is precisely where logistics companies want to be. Here’s why retail-to-industrial conversions make sense:
1 Prime Locations – Malls and big-box stores are often near major roadways, making them ideal for last-mile distribution centers.
2 Existing Infrastructure – Many retail properties already have parking lots, loading docks, and open layouts, which can be repurposed for industrial use with minimal renovations.
3 Zoning Flexibility – As retail vacancies rise, local governments are increasingly open to rezoning properties for industrial use to revitalize struggling areas and create jobs.
4 Faster Market Entry – Compared to ground-up industrial development, repurposing an existing structure can significantly reduce time and costs for developers.
Several companies have already capitalized on this trend. Amazon has transformed former JCPenney and Sears locations into fulfillment centers, while industrial giant Prologis has acquired former mall properties to convert them into logistics hubs. Additionally, local developers are targeting suburban strip malls for small-scale micro-warehouses, catering to businesses that need flexible storage space.
One standout example is the Randall Park Mall in Ohio, once one of the largest malls in America. The property has been transformed into an Amazon fulfillment center, revitalizing the area and creating hundreds of jobs. Similarly, in California, several former Toys "R" Us locations have been repurposed into last-mile logistics hubs.
As consumer shopping habits continue to shift, this trend is expected to grow. Investors and developers looking to capitalize on industrial growth should consider retail conversions as a strategic opportunity. With the right location, zoning approval, and infrastructure modifications, these properties can be successfully repurposed into high-value industrial assets.
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