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Amazon reportedly willing to reduce the size of its logistics park in the U.S.
The American online retailer is looking to get rid of 9.3 million square meters of logistics space in the U.S., according to Bloomberg. The group, which had made its logistical expansion a priority, may now be interested in adjusting the size of its logistics park with the decline in online retail. This is to be done by terminating existing leases or subletting the logistics units.
The logistics units located in New York, New Jersey, Southern California and Atlanta are to be affected, according to Bloomberg, which cited well-informed sources. Prologis, an industrial real estate company whose largest tenant is Amazon, is said to be among the lessors concerned.
The 10 million square feet that Amazon intends to get rid of would be the equivalent of 12 of Amazon's largest ‘fulfillment centers’ in the U.S. In total, however, the space represents only 5% of the locations occupied by the group since the beginning of the pandemic. This is a testament to the unprecedented character of this divestment strategy from Jeff Bezos' group.
Neither Amazon nor Prologis commented on the information published by Bloomberg. But the information released is consistent with recent announcements made by Amazon. During the presentation of its first quarterly results of 2022, the group attributed its constrained profits to logistical "over-construction" that defined the group's activity during the pandemic.
The group currently has a total of 34.4 million square meters of logistics space, twice as much as in spring 2020, a surplus that the group says should cost it 9.3 billion euros ($10 billion) in the first half of 2022 alone.
In parallel, Amazon's warehouses are once again making headlines. The National Labor Relations Board assessed the allegations made by the Amazon Labor Union as credible. The union reports that the Staten Island warehouse held mandatory meetings designed to discourage the unionization of employees. In this context, Amazon threatened to close the site. If the court were to find that Amazon had violated federal law in this way, the ruling would set a precedent.
In the meantime, it remains to be seen whether this slowdown in the logistics network will affect all the countries where Amazon is seeking to expand its presence. The company currently has 110 warehouses in the U.S., plus 85 units abroad. Nevertheless, the warehouses abandoned by the online retailer are likely to find a new tenant quickly; the vacancy rate for commercial real estate in the U.S. is currently below 4%.
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