Warehouses on Hold, Projects Canceled, Amazon Buys More Land

Since it revealed during a Q1 earnings call that it overestimated the e-commerce growth rate and overextended its logistics network—resulting in a loss of nearly $4B, its first quarterly loss since 2015—Amazon has been sharing its pain in towns across the US.

In a multitude of locations, during the past three months the e-commerce behemoth’s foot soldiers have informed city managers and economic development agencies that what they thought was going to be the crown jewel of local economic development—a brand new Amazon fulfillment center, and the minimum of 1,000 jobs that come with it—well, that won’t be happening anytime soon.

In places where giant new warehouses stand ready for ribbon-cuttings this year, Amazon informed the locals that these sparkling white, rectangular monuments to growth would stand empty for the next two years and there would be no new jobs.

In rural communities where Amazon had purchased a large tract of land and local planning officials had approved the development of an Amazon fulfillment center on the site, the company abruptly canceled the projects before ground was broken.

Regarding the projects under development, Amazon has a lot of places to visit to share the bad news about its postponement of new construction: since the beginning of the pandemic, the e-commerce titan has purchased, directly or through its affiliates, more than 4,000 acres of land, according to CoStar.

Make that 4,120: Amazon, which is trying to sublease up to 30M square feet from its 370M SF portfolio of leased space, took a break this month from its postponement tour to buy 120 acres in the Inland Empire’s Coachella Valley near Palm Springs from Atlanta-based Seefried Industrial Properties for $13.4M.

The site has been pre-approved for the development of a 3.4M SF multistory warehouse, although we’re pretty sure that when the approval was granted local officials assumed they might see construction begin in the near future. It’s safe to say that won’t be happening anytime soon.

By putting its marker down in the Coachella Valley, Amazon has stepped into the middle of a simmering NIMBY backlash to the warehouse sprawl in the Inland Empire.

The Inland Empire has the densest as well as the tightest industrial market in the US: the overall warehouse footprint in the two-county region that stretches from the LA city limits to the Arizona border is estimated to be more than 1B SF, most of which has been filled to capacity since the end of 2021.

As industrial space for 1M SF big-box warehouses has dwindled to a diminishing number of infill sites in the western half of Inland Empire, new warehouse construction has moved to the east and to the north, where it is encountering increasing resistance from residents, city councils and environmental groups.

Warehouse moratoriums have been proposed in more than a dozen communities in the Inland Empire, with advocates citing truck traffic that has made the region a national leader in air pollution.

Large industrial warehouses now are proliferating eastward in the Inland Empire through the San Gorgonio Pass and into the Coachella Valley along Interstate 10. Two proposed projects would bring 3.1 million square feet of new logistics space to Banning and Beaumont, neighboring cities in the Pass that straddle I-10—near the parcel of land Amazon just bought.

Residents of the retirement community in Sun Lake, CA, a few miles north of Banning, have put up billboards along I-10 featuring a red stop sign and the slogan “Stop the Banning Warehouse! No more truck traffic, pollution and noise,” GlobeSt.com reported.