3 Considerations As Amazon Eyes JC Penney, Sears Spaces

September 1, 2020, Law360, by Andrew McIntyre, Amazon is reportedly seeking to use former J.C. Penney and Sears stores as distribution warehouses, and experts say mall owners and smaller tenants should keep some key points in mind as the e-commerce giant looks to move in.

Putting an Amazon warehouse in a mall will likely require a zoning change from retail-only to industrial. And, the big question is how open municipalities will be to such a change, said Rob McPeak, a partner at McDonald Carano LLP. He said securing zoning changes could be a drawn-out process depending on the local government and how much opposition there is from residents in the surrounding neighborhood and other tenants in the mall.

Parking and traffic are also major issues. Semi-trucks may be coming into the warehouse during the middle of the night, which would create more traffic and noise. And the appearance of the mall would also change with semi-trucks parked at the facility. Or course, cities have to weigh these considerations with the question of tax. While the presence of semi-trucks may not on its own be terribly appealing, cash-strapped cities may approve a deal in part thinking they’ll get more tax revenue.

“The tax implications are different depending on where you are in the country. If you just have vacant retail space, that might entitle you to a reassessment of your property value,” McPeak said. “Your taxable value might change if you bring in Amazon, and it could turn into an increased property tax valuation.”

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