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Amazon To Scrap Industrial Space in Warehouse Strategy Flip

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Amazon CEO Andy Jassy (Getty Images, iStock)

Amazon aims to bring more to market than it offers as a one-stop shopping hub, and is reportedly retreating chunks of industrial real estate.

E-commerce giants are trying to sublease at least 10 million square feet of warehouse space, people familiar with the situation told Bloomberg. The company may also terminate some of its rental agreements with the landlord. This is another strategy to reduce the space accumulated during a pandemic.

Amazon may consider subleasing up to 30 million square feet, one source told outlets, but the final amount remains in flux. The company’s surplus space is in New York, New Jersey and California.

Amazon has added a large amount of warehouse space During a pandemic in the e-commerce boom. The 10 million square feet in the company’s chopping blocks are reportedly equivalent to nearly 5% of the space Amazon has acquired in the last two years.

“Subleasing is a very common real estate practice,” an Amazon spokeswoman told Bloomberg, not stating where or space the company would sublease.

It seems that subleasing has already begun.West Coast Truck Business Reliable Highway Costs Recently subleased Amazon’s 300,000-square-foot industrial facility in East Bay. A five-year sublease may terminate a direct lease on an Amazon property.

Withdrawal from Amazon’s industrial sector Started last month“We are no longer chasing physical or personnel capabilities,” CEO Andy Jassy said in a statement. The CFO added that the excess capacity would cost about $ 2 billion in the first quarter alone. The company posted a net loss of $ 3.8 billion in the first quarter, the first quarterly loss since 2015.

At the end of 2019, Amazon leased or owned approximately 192 million square feet of warehouse, distribution, and data center space. Two years later, it more than doubled its footprint, reporting 387.1 million square feet.

Amazon’s withdrawal from industrial real estate could have the effect of cooling the market. Tight in space in recent years. The cooling effect can be exacerbated by Amazon’s decision to sublease. Not only do tenants not have to compete with the company for space, they can also steal space directly from their competitors, which can lead to stagnation in vacancy rates.

The industrial real estate sector may have never seen the last part of Amazon. Amazon is reported to be trying to sublease part of the space for only a year or two. In other words, you may return to the game soon.

[Bloomberg] — Holden Walter-Warner

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