Amazon has been on a warehouse buying spree during the Covid pandemic and has directly affected the industrial real estate market.
Over the past two years, since the beginning of the Covid pandemic, Amazon has more than doubled its warehouse holdings, jumping from 192 million square feet at the end of 2019 to more than 410 million square feet in 2022.
Warehouse vacancies are effectively now at zero nationwide. Rent has spiked aggressively to record levels worldwide. In 2021, rent skyrocketed to a record 15 percent in 2021. In the United States, the average rent hike rose even higher, at nearly 18 percent.
Amazon is not alone in creating the rent spike, but the mega-company is easily the biggest contributor to the rise. Amazon’s style of e-commerce with two-day shipping and free returns requires a ton of warehouse space and has spent billions each year snapping up real estate as soon as it becomes available.
Amazon is also in a quest to take control of the supply chain, as tumult within the supply chain has made it more expensive for companies to ship goods around the world. Amazon used to lease nearly all of its warehouses, but when the pandemic changed the supply chain, the company shifted to buy up all of its logistics operations.
The company’s frenzied pace in buying up the supply chain has fueled speculation that Amazon could soon be launching its own delivery business, which would compete with DHL, FedEx, UPS, and other popular delivery services. If true, Amazon will have even more reason to snap up even more warehouses worldwide.
More than $100 billion has been spent in just two years by Amazon to purchase property and equipment. This includes orders for eight of the 10 largest warehouses being built in the United States.
Be the first to comment