Amazon Doubling Same-Day Delivery Hubs

Amazon is back in the industrial real estate expansion game one year after pulling back from the sector, but the e-commerce giant has new items on its shopping list.

Amazon plans on doubling its amount of centers geared towards same-day delivery, The Information reported. The facilities, which are smaller and closer to customers than traditional fulfillment centers, appear to be a more targeted opportunity to continue growth after the company placed millions of square feet of warehouse space on the sublet market.

The company offers same-day delivery on select items in 90 markets across the country. The timeline of the strategy to add to its footprint is unclear.

The big winners in Amazon’s latest warehouse plan are industrial real estate landlords and developers. Those same landlords and developers were left reeling last year when Amazon slowed down its seemingly ceaseless expansion of industrial leases and projects.

From 2020 to 2022, Amazon doubled its fulfillment and distribution space across the country, spending billions of dollars to meet demand from consumers working and shopping from home during the pandemic. By the end of 2021, it had 387 million square feet of leased industrial space and owned nearly 17 million square feet in North America.

Last spring, however, chief executive officer Andy Jassy said the company was “no longer chasing physical or staffing capacity,” signaling a retreat from the industrial market. As one of the largest tenants in the sector, the slowdown from Amazon threatened to topple rising rents landlords commanded as vacancies tightened across the country.

A month later, Amazon put at least 10 million square feet of industrial space up for sublease. Excess space lingered in New York, New Jersey and California.

Time is of the essence for Amazon if it’s expanding last-mile capabilities in New York, as environmental groups push for more regulation of the property type.

Activists argue a proposal making its way through the city to reduce carbon emissions neglects last-mile centers, which they point to as a source of truck traffic, air pollution and greenhouse gases, Politico reported. The New York City Environmental Justice Alliance is one such group pushing for the city to require a review and special permit for facilities in the city.

Department of City Planning director Dan Garodnick said at a recent hearing the city recognized issues with last-mile centers and was working to “understand and think about solutions.”
— Holden Walter-Warner