With online shopping slowing in the post-pandemic economy, Amazon.com has hit pause on 49 distribution warehouses across the U.S., including industrial sites in West Covina and Oceanside.
The Seattle-based e-commerce giant canceled, closed or delayed opening more than 50 million square feet of warehouse space, the Orange County Register reported, citing MWPVL International. Canceled warehouses total to nine in the Golden State.
The nine nixed Amazon warehouses statewide – five of them in the Bay Area – add up to 4.4 million square feet. The company will scale back plans in West Covina, Oceanside, Hayward, San Leandro, Santa Rosa, Sonoma, Salinas and Bakersfield, according to MWPVL.
In West Covina, Amazon canceled the opening of a 177,000-square-foot delivery station. While MWPVL blamed the decision on public protests, an Amazon spokeswoman wouldn’t confirm it.
In Oceanside, the company canceled the opening of a 143,000-square-foot delivery station after it failed to obtain a permit.
Despite the cutbacks, Amazon is moving forward with development of several new, fully automated fulfillment centers. They include a 4.1-million-square foot warehouse under construction in Ontario, the biggest of the company’s delivery processing sites.
Space for Amazon’s delivery operations jumped to 379 million square feet since March 2020, up by 214 million square feet as of May.
But faced with a net loss of nearly $5.9 billion in the first half of the year, Amazon halted its expansion.
After more than doubling its warehouse capacity during the pandemic, the Seattle-based e-commerce giant announced last spring it would shed between 10 million and 30 million square feet.
Despite the cutbacks, warehouse rents continue to soar across Southern California.
Demand for commercial real estate’s “hottest sector” remains strong, especially near the ports of Los Angeles and Long Beach, according to the Pasadena Star-News.
Vince Tibone, head of industrial research at Newport Beach-based analytics firm Green Street, said warehouse demand remains strong, especially in Southern California, a market he called “the best in the nation for industrial warehouse space.”
Before the pandemic began in early 2020, online sales growth led to above-average demand for warehouse space, he said. After COVID, warehouse market rents grew 18 percent last year nationwide, and are expected to do better this year.
He said Southern California warehouse asking rents should be up 65 percent over that same two-year period, with Bay Area rents up 40 to 45 percent.
— Dana Bartholomew
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