By Esther Fung and Sebastian Herrera
Simon Property Group Inc., the biggest mall owner in the U.S., has been in talks with Amazon.com Inc. to turn some of its anchor department-store spaces into Amazon fulfillment centers, according to people familiar with the matter.
For Amazon /zigman2/quotes/210331248/composite AMZN -0.74% , more fulfillment centers near residential areas would speed up the crucial last mile of delivery. For Simon /zigman2/quotes/209746667/composite SPG -2.05% , turning over what was once prime mall space to fulfillment centers shows it would be willing to relinquish an essential way to bring in more mall traffic to secure a steady tenant.
Simon’s discussions with the online retailer have been under way for months and began before the coronavirus pandemic, these people said. The two companies have explored converting stores formerly occupied by J.C. Penney Co. Inc. /zigman2/quotes/207971682/delayed DE:JCP +1.36% and Sears Holdings Corp. /zigman2/quotes/202095319/delayed SHLDQ +3.02% into Amazon distribution centers; in some cases, Simon and Amazon explored buying out occupied space from the retailers, these people said.
The talks reflect the intersection of two trends that predate the pandemic but have been accelerated by it: the decline of malls and the boom in e-commerce.
It wasn’t clear how many stores are under consideration for Amazon, and it is possible that the two sides could fail to reach an agreement, people briefed on the matter said. Simon malls have 63 Penney and 11 Sears stores, according to its most recent public filing in May.
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