![Amazon CEO Jeff Bezos with (clockwise from top left: 1055 Bronx River Ave. in Bronx, NY; 3507 W. 51st St. in Chicago; 13200 Southwest 272nd St. in South Miami-Dade, Florida; 28820 Chase Place in Valencia, California (1055 Bronx River Ave via Google Maps; 3507 W. 51st St. via 42 Floors; 13200 Southwest 272nd St. via Google Maps; 28820 Chase Place via IAC Commerce Center)](https://static.therealdeal.com/wp-content/uploads/2020/07/ft-amazon-earnings-warehouses-200x200.jpg)
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The last mile: Amazon in talks with Simon to convert bankrupt megastores into fulfillment centers
The companies are eyeing spaces once leased to bankrupt department stores J.C. Penney and Sears
![Simon Property Group CEO David Simon and Amazon CEO Jeff Bezos (Simon by Mireya Acierto/Getty Images; Bezos by MARK RALSTON/AFP via Getty Images)](https://static.therealdeal.com/wp-content/uploads/2020/08/david-simon-amazon.jpg)
Amazon may soon take over the spaces of bankrupt retailers it has left in the dust.
The e-commerce giant is in talks with mall owner Simon Property Group to turn anchor stores into distribution hubs, the Wall Street Journal reported.
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![Amazon CEO Jeff Bezos with (clockwise from top left: 1055 Bronx River Ave. in Bronx, NY; 3507 W. 51st St. in Chicago; 13200 Southwest 272nd St. in South Miami-Dade, Florida; 28820 Chase Place in Valencia, California (1055 Bronx River Ave via Google Maps; 3507 W. 51st St. via 42 Floors; 13200 Southwest 272nd St. via Google Maps; 28820 Chase Place via IAC Commerce Center)](https://static.therealdeal.com/wp-content/uploads/2020/07/ft-amazon-earnings-warehouses-200x200.jpg)
![Amazon leases nearly 154 million square feet of warehouse space compared to the 4 million square feet it owns (Credit: iStock)](https://static.therealdeal.com/wp-content/uploads/2019/12/493-amazon-warehouses-200x143.jpg)
The main target for conversion appears to be Simon-owned stores formerly or currently occupied by J.C. Penny and Sears Holdings. The mall owner has 63 J.C. Penny and 11 Sears stores, and both department-store chains have filed for Chapter 11 bankruptcy protection and have been closing dozens of locations.
Simon — the largest mall owner in the U.S. with 204 properties — has been grappling with retail tenant closures in recent years even before Covid. The online shopping phenomenon has been giving brick-and-mortar retailers a run for their money for years. But the coronavirus forced many malls to temporarily close, worsening retailers’ bottom lines.
Amazon, meanwhile, reported a record $88.9 billion in second quarter sales. It’s also announced that it would increase its fulfillment center square footage by 50 percent this year.
Simon may have to rent the space at a discount: Warehouse rents are typically less than $10 a square foot, while department-store rents can be as low as $4 a square foot or as high as $19 a square foot.
Simon and Brookfield Property Partners are putting in a joint bid to take over the J.C. Penny chain, which would give them more control over the store space. [WSJ] — Akiko Matsuda