Converting Former Big-Box Stores to Warehouse Space: Challenges, Opportunities

As e-commerce has accelerated, so had the demand for warehouse space. According to a report from CBRE, nearly 14 million square feet of big-box retail space in the U.S. has been converted to industrial space.

Chain Store Age spoke with Mike Schodowski, president of Shelving Inc., about the conversion of former big-box retail space to warehouse space, including what to look for when inspecting the current layout for specific distribution and fulfillment needs, considerations for transitioning the dock for shipping/receiving and tips for obtaining proper city approval and zoning, and more.

What are the biggest challenges in converting former big-box stores to warehouse space?
The most essential process to establish in a warehouse space is traffic flow. Big-box stores are designed to navigate the flow of people traffic, whereas warehouses are more focused upon getting products in and out as quickly and efficiently as possible.

The popular, fast-moving items should be closer to shipping and receiving, and slow-moving items can be placed farther away. Keep inventory loosely packed together so it can be easily accessed without ladders or forklifts. This will prevent your team from wasting time digging through pallets or trying to reach products they can’t access as easily as they should.

What do you need to look for when inspecting the current layout for distribution and fulfillment needs?
Inspect the current layout and see if it fits your needs. Most big-box retailers will have the bare essentials, such as big loading bays and spacious inventory capacity. You’ll need to keep an eye out for things like un-removed store fixtures, unusable architectural choices, or narrow passageways that could get in the way of your incoming shipments. The current retail floor can be used to store small items, or the barrier between the retail floor and back of house can be eliminated to utilize as open storage.

Another element that is key to distribution and fulfillment needs is establishing the layout flow of the space longways as opposed to perpendicular. This will allow a more efficient use of square footage to store the highest number of items as possible.

What type of locations work best? (for example, standalone versus in-line anchor)?
Standalone retail locations work best for warehouse conversions as they have high ceilings, in and out overhead doors, and not as many pillars as in-line anchor locations tend to have. Height makes a significant difference to help maximize and reach storage capacity goals.

What about size…does the store need to be a certain size for the conversion to make sense?
With the organization systems available today, a small size building is not as large of a deterrent for a conversion. Pallet racks can increase storage capacity up to 50% by establishing six-foot narrow aisles opposed to traditional 13- and 14-ft. aisles.

If the building is even smaller, racking can be condensed against the wall with mobile shelving and broken apart as needed to access items. Even with a smaller footprint, incorporating efficient organization can make warehouse goals within reach.

From a structural component, what are the changes and investments that need to be made?
Structurally, there are not many changes that need to be made in a warehouse conversion since it is simply a building with a different use. In shipping and receiving, investments may need to be made to modify overhead doors for truck wells opposed to flat grounds used by many retailers. Adding a conveyor can also speed up the distribution process.

I’m told the zoning, permitting and approvals process can be very complicated. What does it involve?  What tips do you have for retailers/property owners in this regard?
The key is to start planning as soon as possible. Start by measuring the space, and determine how products will be stored and with what racking or shelving. From there, create a preliminary plan that includes products to be stored, maximum height of storage, and maximum height of product to be stored and send it to the city zoning committee. While each city will have different regulations based on what and how items are stored, they will be able to direct you as to what modifications need to be made. Typically, sprinkler systems will need to be adjusted given the new use of the space.

Other than potentially hiring a logistics and organization expert to assist in the layout and space utilization, no significant investments need to be made prior to the permitting process. Getting ahead of the planning game will allow retailers/property owners to know exactly what investment will be required for their conversion with minimal surprises.

If you could give retailers/property owners that are thinking of converting an empty big-box store into a warehouse one piece of advice, what would it be?
To reduce cost and increase storage capacity, I’d recommend retailers/property owners choose a space with high ceilings for their conversion. Storing items vertically as opposed to horizontally will save on lease payments as they are determined per square foot. Incorporating a mezzanine can also significantly increase storage capacity, essentially creating a second floor to store additional product.

Mike Schodowski is president of Shelving Inc., a provider of corporate and consumer shelving and storage solutions since 1960. With more than 30 years of experience in the family-owned business, he assists customers with their storage and warehouse redesign needs to maximize space utilization and efficiencies. He can be reached at [email protected].