No room in the warehouse: Amazon fuels shortage

Space tight in LA and New Jersey, and Canada could run out this year

New York /
May.May 06, 2021 10:10 AM
Illustration of Amazon's Jeff Bezos (Photo illustration by Kevin Rebong for The Real Deal)

Amazon’s Jeff Bezos (Photo illustration by Kevin Rebong for The Real Deal)

Amazon takes up warehouse space — a lot of it.

It’s to the point where the vacancy rate is so low in some North American cities that their economies could be throttled, according to Colliers International Group and CBRE reports cited by Bloomberg News.

The warehouse vacancy rate in Toronto shrunk to 0.5 percent as Amazon snatched up warehouses in response to the e-commerce boom, the publication said. That’s the lowest among major North American markets.

Other Canadian locales aren’t far behind, with vacancy rates in Victoria and Vancouver at 0.7 percent and 1 percent, respectively. They are followed by Montreal (1.4 percent), Los Angeles (1.8 percent), Salt Lake City (2.2 percent) and central and northern New Jersey (2.7 percent), Colliers found. The U.S. average is 5.5 percent.

Amazon is the main driver of the squeeze, having increased its logistics footprint by about 12 million square feet across nine major Canadian markets since late 2019, according to the publication.

E-commerce tripled its share of total Canadian retail sales to 10.4 percent at the start of the pandemic, increasing the need for warehouses and fulfillment centers. Costs to lease industrial space went up by 25 percent.

Amazon rented a quarter of all the space that came up for lease in Toronto last year, and has an even larger footprint in Montreal and Ottawa.

At this rate, Canada could run out of warehouse space by the end of the year, CBRE predicted.

Desperate times call for desperate measures, and the lack of space has some manufacturers packing orders in parking lots, Bloomberg noted.

Logistics costs amount to roughly 9 percent of the country’s gross domestic product. A lack of space would drag down the country’s economy, the publication reported.

“There are fewer jobs, fewer permanent jobs that can be created, because companies aren’t able to fulfill demand,” Jan De Silva, president and CEO of the Toronto Region Board of Trade, told the news service.

As for Amazon, it doesn’t look like the company plans on slowing down. It just leased a massive warehouse in Woodmere that brings its planned warehouse space on Long Island to more than 1.4 million square feet.

[Bloomberg News] — Cordilia James





    Related Articles

    arrow_forward_ios
    The New York Life Sciences and Biotechnology Center at First Avenue and 41st Street (NY Life Sciences)
    Life sciences leasing breaks annual record in five months
    Life sciences leasing breaks annual record in five months
    The commercial market was hit hard by the pandemic, and property tax revenue is expected to fall 5 percent. (iStock)
    Tax bills show how much Covid devalued NYC real estate
    Tax bills show how much Covid devalued NYC real estate
    Richard Segal of Seavest Investment Group, David Marx of Marx Development Group and 902 Quentin Road in Brooklyn (Photos via Seavest Investment Group, Marx Development Group and VRMNY)
    Westchester firm buys $54M Brooklyn medical building
    Westchester firm buys $54M Brooklyn medical building
    546 Broadway and Isaac Chetrit (Google Maps)
    Uniqlo finalizes $160M buy of its flagship at 546 Broadway
    Uniqlo finalizes $160M buy of its flagship at 546 Broadway
    688 and 702 Court Street, Brooklyn with Madison Capital managing partner Richard Wagman (Google Maps, Madison Capital)
    Madison Capital snatches up Red Hook industrial sites for $45M
    Madison Capital snatches up Red Hook industrial sites for $45M
    Hartz Mountain Industries CEO Leonard Stern and 235 Pinelawn Road (Google Maps, Hartz Mountain)
    Warehouse developer accused of violating “Long Island First” policy
    Warehouse developer accused of violating “Long Island First” policy
    Real Estate EFTs See Investment Amid Pandemic Recovery
    Why investors are rushing into real estate ETFs
    Why investors are rushing into real estate ETFs
    Manhattan sublease surge shows signs of slowing
    Manhattan sublease scourge finally abates
    Manhattan sublease scourge finally abates
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...