Tippecanoe Mall owned and operated by Simon Property Group. The company is reportedly in talks with Amazon to fill vacant department store space with warehouses.
(Emilie Syberg/WBAA)
Indianapolis-based Simon Property Group is reportedly in talks with Amazon to use vacant space in its malls across the country. The recent news comes as several of Simon’s anchor tenants have filed for bankruptcy.
The coronavirus pandemic hit traditional mall retailers especially hard the past few months causing an uptick in bankruptcy filings, including JC Penney, as companies struggle to pay the bills including rent.
Simon Property Group is the largest mall operator in the U.S. It reported lower earnings in the last quarter in part due to tenants struggling to survive.
John Talbott, Indiana University Kelley School of Business Center for Education and Research in Retail director, said anchor tenants didn’t necessarily pay top dollar for the spaces they occupied, but rather made their value by helping to draw people to the malls.
“Simon wanted them to be part of the mall because they drew all the other customers in, you know, that's been the historic model,” said Talbott. “I think recently, that model has been broken for a while, the anchor entities just aren't drawing traffic at the same level, as they have in 15 years ago.”
One option the company is exploring would be to fill empty brick and mortar locations with Amazon warehouses.
Talbott said the mall space could in turn also help Amazon with increasing next-day and even same-day deliveries by having fulfillment centers closer to consumers.
“This real estate, if you think about malls, you know, they tend to be in centers of population,” he said. “So, from a proximity standpoint, they're pretty good in terms of being able to get the goods to people quickly.”
Talbott said having a tenant like Amazon would be beneficial for Simon which would otherwise have to figure out how to repurpose former department store buildings, costing the company money.
