Amazon is still growing its warehouse footprint. Unfortunately for industrial landlords, it’s mostly doing that by acquiring its own facilities.
After rapidly doubling its North American real estate footprint as Covid fueled demand for warehouses, Amazon all but paused its expansion entirely last year — at least as a tenant.
The e-commerce giant was renting around 392 million square feet of warehouses across North America by the end of last year, SEC filings show, up 5 percent from 2021. It is the nation’s largest industrial tenant, with a portfolio large enough to cover about half of Manhattan.
But that increase pales in comparison to the 30 percent of additional space Amazon added in 2021, when its footprint leapt to 370 million square feet from 285 million square feet in 2020.
The numbers bear out Amazon’s previously announced plans to slow its warehouse expansion. By September, the company had either shuttered or canceled plans to open 42 facilities — about 25 million square feet of space — and delayed opening a further 28 million square feet, according to Bloomberg.
On an earnings call last week, CEO Andy Jassy said the firm was trying to become “more efficient” with its portfolio.
If its slowdown in leasing was not enough of a headache for industrial owners, Amazon is increasingly becoming its own landlord.
At the end of last year, Amazon owned about 22 million square feet of its own warehouse and distribution space in North America — a roughly 32 percent jump from 2021, when it reported 16.7 million square feet, and a staggering 158 percent increase from 2020.
Amazon is following in the footsteps of Walmart, which owns more distribution facilities than it leases. As of January 2022, Walmart owned 110 warehouses in the U.S. and leased 47, according to an SEC filing.
Many e-commerce providers have pulled back on leased space in response to inflation and fears of a recession. But industry players say there’s still plenty of demand for last-mile facilities
“Is it the strongest it’s ever been? No, it’s not as strong as 2021,” Hamid Moghadam, CEO of Prologis, the world’s largest industrial landlord, said on an earnings call last month. “But compared to any 10-year period, we would consider this a very strong market.”
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