California is about to be home to Amazon’s largest warehouse yet, one coming in at nearly 4.1 million square feet.
Amazon experienced major growth during the pandemic as individuals turned to online shopping in record numbers. The company went on a massive hiring spree, and had been expanding its warehouse footprint as well. According to The Seattle Times, Amazon leased a property in the summer of 2021 and has been working to transform it into a five-story, 97-foot-tall building with 4,055,890 square feet of space.
The expansion comes at an odd time for Amazon. Despite the record growth of the past couple of years, a return to normal has taken a toll on the e-commerce giant. The company recently reported its first quarterly loss in seven years, prompting it to reign in some of its expansion efforts, including the expansion of its warehouse footprint.
Multiple outlets have reported that the company wants to get rid of 10 to 30 million square feet of warehouse real estate, although that doesn’t necessarily mean the Ontario location is one of those at risk. Having a single 4.1 million square foot warehouse could have significant advantages over several separate locations that cumulatively come in at a comparable size. It’s also likely that Amazon could have trouble offloading the location, as there are few companies that could make use of such a massive property.
“I’m not sure they’d be able to find another single user for space of that size,” Joshua Ohl, senior market analyst for real estate data firm CoStar Group, told The Seattle Times. “From what I’ve heard, Amazon has been placing more of its older facilities on the sublease market that have less automation, fewer (high-level loading docks) and lower clear heights.”
The coming months should be interesting for Amazon, as well as the retail and e-commerce markets in general. Some business leaders, such as JPMorgan’s Jamie Dimon and Tesla’s Elon Musk, are warning of major economic headwinds in the near future. If those predictions are true, it could spell trouble for Amazon, as well as its rivals.
