Commercial real estate firm JLL recently announced its launch of the Retail Industrial Task Force that will provide retail owners, occupiers and investors with one team to help them solve their real estate and supply chain distribution needs as a result of the COVID-19 pandemic.
When the COVID-19 pandemic hit the U.S. retailers were caught in a tough position. They had to shut their doors temporarily, but customers continued to shop online. Unfortunately, many retailers were not in a position or, weren’t interested in, moving to a 100% online model. JLL, has expertise in retail property management and capital markets services for investors and brokerage for occupiers, but those services typically dealt with corporate real estate executives. Chief Investment Officer and Chief Financial Officers would direct supply chain strategies and JLL’s industrial experts would help validate and improve their delivery systems in separate functions.
Recently, JLL noticed a melding of the professionals inside retailers as product and distribution had become one rather than separate considerations. That’s why JLL formed the Retail Industrial Task Force—to simplify retailers’ needs with one blended service model. The task force caters to the whole lifecycle of evolving real estate requirements between retailers and retail property owners.
JLL’s Retail, Industrial and Capital Markets business line stakeholders will work as one to bring its clients customized real estate solutions and an end-to-end approach that will encompass all of the company’s expertise. JLL’s professional advisory services and solutions will be extended to retail owners, occupiers and investors in the United States. These services include supply chain consulting, urban logistics, retail redevelopment, retail and e-commerce distribution, a capital markets scoring system for portfolios and a proprietary system that looks at demand and metrics of real estate.
“We want to help clients determine the highest and best use for their properties,” JLL Executive Vice President Geno Coradini told Connected Real Estate Magazine. “Particularly when you get in these densely populated urban areas, that’s where e-commerce occupiers are trying to penetrate because historically, they’ve been on the outskirts, away from the rooftops. If they can get closer to the population, there are great opportunities there. So not every retail property is treated the same.”
Repurposing commercial real estate
The COVID-19 pandemic also put a lot of tenants in a position where they couldn’t pay rent. Some worked out deals with landlords to defer their rent or negotiate a decrease. Either way, landlords saw their rental income stream diminishing and were looking for alternative occupants that can often come in forms of fulfillment centers, medical, multi-family, healthcare or entertainment fields.
JLL is working with landlords who are looking to pivot and find the best use for their space and the conversation has recently turned towards industrial, according to Coradini. JLL will do an analysis on its clients’ behalf and look at the market rates in terms of rental rates and determine how feasible it is to convert a current retail space into an industrial one.
“There’s a very strong demand for fulfillment space as part of the pandemic, which has spiked by the e-commerce business out there,” Coradini told Connected. “Bed Bath & Beyond and Best Buy recently announced they’re converting some of their stores to support ecommerce and there are other national retailers that are doing this type of thing.”
Meanwhile there are other retailers with a large box store where that model is no longer working. They are trying to decide how to potentially sublease a portion of their space to another user, whether it’s a fulfillment center or other type of use.
“Working with these landlords, it’s not something you just flip the switch and say, ‘You know what? We’re going to close that 100,000 square foot retail box over there and it’s going to be a fulfillment center,’” Coradini said. “There are so many factors that come into play at the local level. For example, there could be concern if you convert from what was a retail location to an industrial type use that sales tax dollars just went away.”
Other concerns surrounding turning retail stores into industrial centers include potential rent revenue losses and neighboring retail stores and residents that don’t want industrial traffic coming in and out of their shopping center or passing by their home.
“If there’s any one good thing that’s come out of this pandemic, aside from huge sales in e-commerce, is landlords and occupiers are working more closely together, in my opinion than I have seen in the 20 some odd years that I’ve been in this business,” Coradini said.
Joe Dyton can be reached at email@example.com.