According to the Wall Street Journal, Simon Property Group, the largest owner of U.S. malls, is in talks with Amazon to turn troubled retail branches into “last mile” distribution centers.
A report published on Sunday indicated that Simon, whose King of Prussia Mall is the largest moment in the country, is particularly interested in renting old or existing locations of J.C. Penney and Sears to the tech giant:
A connection between Simon and Amazon would show how retail and logistics (delivery for the last critical mile) converge faster.
Several U.S. malls They already do business with Amazon, such as parking rent for Amazon’s huge fleets of pickup trucks. But for Simon, renting a giant, well-placed interior location would be the rare case of a giant mall operator providing a premium retail area for Amazon.
Amazon’s e-commerce style has long been seen as the biggest risk to the long-term viability of shopping malls, which have struggled in recent years as the decline of giant stores accelerates. Neiman Marcus, J.C. Penney and Lord and Taylor have been the last to file for bankruptcy in recent months.
Simon Property Group and Brookfield Property Partners LP recently submitted a joint bid to win J.C. Penney, whose homes Amazon has envisioned as an imaginable place for its grocery stores to soon be introduced, a source told the Wall Street Journal.
The report suggests that Simon might be willing to lease branch homes to Amazon at warehouse rates well below what he might rate in a different way than retailers.
In the past, Simon Property Group has converted its J.C. Penney’s gated location into apartments at the King of Prussia Mall.
But with the coronavirus pandemic that complicates the uses of choice, adding medical consultations and the elderly, switching to logistics can be an uncomfortable solution. Many mall tenants rely on retail branches to generate pedestrian traffic and have clauses in their contracts that they contract if those giant homes remain empty.
Amazon recently released record sales and profit figures amid the pandemic, while Simon Property Group will release its smaller quarterly profit in six years on Monday. The company owns or owns more than 325 homes in the United States, adding seven out of ten of the nation’s largest shopping malls.
The King of Prussia Mall was not particularly discussed as an Amazon imaginable intermediate distribution site, however, given Simon’s vocal interest in the beyond conversion of J.C. Penney’s former location of the mall, this is a progression that may interest either company.