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Mixing DCs and Retail Works

The NAIOP Research Foundation released a report examining trends related to the convergence of industrial and retail real estate, with implications for developers, investors and building owners.

This includes the conversion of shopping centers to distribution centers, adding distribution uses to existing retail buildings, and the development of mixed-use properties for both distribution and retail.

In the wake of the explosive expansion of ecommerce during the Covid 19 pandemic, functionally obsolete shopping centers can be attractive targets for conversion to distribution space given their size and location, according to the report’s author, researcher Dr. Dustin C. Read.

However, developers should weigh these advantages against the costs associated with converting or demolishing existing buildings, possible political opposition and the difficulty of acquiring full control of a shopping center, he said.

Read also discovered that retailers are adding distribution capacity and online order pickup and return services to existing retail stores to enhance their customers’ shopping experience.

He says new retail development also can minimize congestion in parking lots and store aisles by tailoring building and parking lot design to the needs of both in-store and online customers.

Developers already are pioneering mixed-use developments that co-locate retail and industrial space. Locations near transportation networks and population centers support both uses and onsite retail can serve as an amenity for logistics workers.

However, pedestrian safety requires careful planning to segregate industrial and retail traffic, and developers should be prepared to address local concerns about a development’s traffic impact on adjacent roads, Read warns.

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