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Amazon Looking To Shed 10M SF In Warehouse Space

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During the pandemic, the demand for warehouse space skyrocketed as more people shopped online.

To reduce excess warehouse capacity and boost profits Amazon We are reportedly planning to sublease at least 10 million science fiction in warehouse space in several major markets, including Atlanta, New York, New Jersey and Southern California, which could open up three times that number.

Source Talk anonymously to Bloomberg The company said it could even try to negotiate the termination of existing leases.

If Amazon actually gives up its 10 million science fiction warehouse, it’s only 5% of the space it’s added over the last two years, Bloomberg said. Amazon also reported that it was cautious by considering a short sublease period of one or two years in case demand is expected to grow again soon. E-commerce sales From the peak in early 2020 However, it fluctuates quarterly and is still well above pre-pandemic levels.

“Sublease is a very common real estate practice,” Amazon spokeswoman Alisa Carroll told Bloomberg. “This can reduce the financial obligations associated with existing buildings that no longer meet our needs. Sublease is what many established companies do to help manage their real estate portfolio. is.”

This move isn’t surprising at all for several reasons. The signs show that Amazon has been shifting from its warehouse leasing strategy for some time. As reported by Bisnow In the second half of 2021. Wharton Equity Partner Founder and Chairman Peter Lewis Increased alertness to Amazon’s leasing activities Bisnow November event..

“We’re actually seeing them withdraw from these potential rental contracts in many cities,” Lewis said. “If you’re talking about leasing with Amazon today, I think you need to be offended. Don’t leave anything to the bank about what they’ll show up at the closing.”

Now, beyond the shift in real estate strategy, there is actually an oversupply of harmful real estate.Amazon Chief Financial Officer Brian Orsavsky Said February financial results announced The company will begin to reduce its investment in physical warehouses.

And in April, Orsavsky said the company’s hiring and inventory boosts. Coronavirus pandemic was Affect its profitsPlease note that the company has more space than necessary and has changed from understaffed to overstaffed.

The real estate industry is closely watching this growing tension, as Amazon was a major demand driver to the industrial sector and a major money-maker for landlords when it was actively renting. Dew ClearyFor example, I focused on Amazon pullbacks. Reduce exposure to the company He predicted that other companies would intervene to regain the slack of the e-commerce giant.Amazon is also the largest tenant of Prologis..

Amazon tapped KBC Advisor Size your portfolio appropriately through sublease or termination. Founded in 2016, KBC has been processing Amazon’s real estate decisions nationwide, primarily and quietly, for many years.However, the company is expanding rapidly, with considerable employment Possibility to place yourself for diversification..

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