Real Estate - SEPTEMBER 17, 2020

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Retail conversions to logistics to amount to 5msf per year

by Andrea Zander

COVID-19 has brought more than five years of evolution in the retail landscape into less than five months of time. Increased demand for high-quality and infill logistics real estate is on the rise, stemming from the accelerated adoption of e-commerce and just-in-case inventory. Retail conversions to logistics could amount to 5 million square feet to 10 million square feet per year, or 50 million square feet to 100 million square feet over the next decade.

Prologis explores the opportunity to convert retail space for distribution uses and the implications to real estate.

Retail conversions are complex. Prologis has examined many conversion candidates across a range of formats, center sizes and markets. While challenges are many and varied, there are four main themes:

Economic, including re-tenanting as retail; other higher and better use cases, including apartments; and high costs basis as logistics alongside the frequent presence of locall
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