DC Velocity - October 2017

Str at e g y

TH E MA L LING O F LOG I S TI C S

Properties Inc., which will oversee what’s left of the demolition that began three years ago and then build the fulfillment center at a reported cost of $177 million. It has also been reported that the Cleveland-Cuyahoga County Port Authority plans to issue $123 million of bonds to finance the project. Not every mall project will have Amazon’s imprimatur or a willing public-sector funding source.

Yet Tompkins said that outdated malls could be effectively repurposed in their current design and without being torn down. Many interior malls have multistory designs with open courtyards or atriums that would be well suited for the low-cost automated order creation and parcel sortation that is the linchpin of e-commerce fulfillment, he said.

Tompkins cited an example of a traditional two- to
three-story indoor mall with stores on either side of a
central multistory courtyard. A mini-load AS/RS (auto-
mated storage and retrieval system) could be used for
storage in the courtyard and for batch picking. Totes of
batch orders could be dispatched to an area of the mall
once occupied by retail stores, and, via a robotics unit
and parcel sortation system, be sorted into individual
orders and then packed and sorted to delivery zones or to
click-and-collect pickup locations, Tompkins said. Batch
picking could be done in the mall on each level for orders
to be dispatched to “stores” on multiple levels, he added.

GOING MAINSTREAM

Mall repurposing will be done opportunistically starting next year and become mainstream in 2019, Tompkins predicted. This would all be part of a larger discussion over the need to have brick-and-mortar and digital commerce co-exist rather than forcing consumers and companies to choose between the two, he added.

The lease of the old Randall Park Mall demonstrates Amazon’s knack for positioning itself at the vanguard of something relatively new. Neill Kelly, a CBRE senior vice president and leader of its Occupier Restructuring and Disposition practice, has seen no interest so far from logistics companies in the department store spaces CBRE is marketing. But Kelly said the mall’s time will come, especially as the retail and logistics markets continue to evolve.

“The distress in the retail space has to go a little deeper, and the e-commerce fulfillment companies are going to have to find a little more justification in their underwriting for those locations. But I guarantee that they will intersect, and that will be a viable avenue for second-gen-eration big-box space that’s well located,” he said.

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