The e-commerce giant has slowed the construction boom by freeing up hard-to-find materials and land for other projects in the booming industry.
Amazon’s downturn has been a boon for the rest of the warehouse industry, especially when it comes to sourcing materials, according to industry sources.
Last month, Amazon announced plans to cut at least 10 million square feet of warehouse space after the company reported slow growth and a weak earnings outlook, which Bloomberg said was attributed to overbuilding.
As the pace of the e-commerce giant’s expansion slows, it should cut lead times for currently scarce materials such as roofing components, roof insulation, pallet beams, precast concrete and steel. – On the basis of the general contractor. Other materials that could become more affordable include storage dock equipment, HVAC equipment and electrical equipment, Belanich said.
“As Amazon gained momentum, was very active and built new facilities, delivery times for these materials got longer and longer,” Bellanic said. Then, apparently, demand for these materials increased significantly, leading to an increase prices. ”
“When you reduce demand for these things, it definitely reduces lead times, and we should start to see the cost impact of these materials decrease,” Belanich said.
Charles Beyrle, CEO of Westport Properties, based in Irvine, Calif., owner and operator of warehouse, multi-family and industrial properties in the US, said Amazon’s slowdown would certainly free up material for other new developments.
“When you take the example of roof trusses, they’ve been [out] for 6 to 12 or 18 months, depending on what they are,” Beyrle said, noting that Amazon’s slowdown would “definitely prioritize things differently.” This doesn’t just apply to Amazon. bucket, because everyone is fighting for this bucket.”
Amazon has ramped up spending during the pandemic to capitalize on growing demand for e-commerce and home delivery. In some cases, Amazon bought everything it made for months, putting enormous pressure on an already overburdened supply chain. The situation worsened earlier this year when contractors began stockpiling supplies.
Amazon has been the largest warehouse builder over the past three years, totaling $10 billion, or about 6 percent of total construction work, according to Dodge Data & Analytics.
But Amazon’s market share has jumped to around 13 percent, including projects built specifically for Amazon by developers like NorthPoint Development, Dodge chief economist Richard Blanche said at a webinar on construction prospects.
Amazon “is such a big player in this market that if they start cutting construction activity, it will pull the market along with them,” Branch said, referring to the total number of warehouse launches. While this means a possible slowdown in the warehouse industry as well, a pullback in other areas is welcome.
That’s because Amazon’s slowdown isn’t just benefiting materials supplies, said Bob Smitana, vice chairman and CEO of HSA Commercial Real Estate, a full-service national commercial real estate firm based in Chicago. The land market should also be moderate.
“This is actually good news for some of us as one of the major players in U.S. real estate allocation is slowing down,” Smitana said. “It will eliminate some of the additional competition.”
For example, Brian Sudduth, president of Miller Construction, a Fort Lauderdale, Florida-based general contractor, said demand in Florida is still strong and Amazon’s expected pullback hasn’t affected his outlook. In fact, Miller has more warehouse work in progress in 2023 than this year.
“I don’t see [a slowdown] in central South Florida,” Saddat said. “When you add in all the other industrial developments that are happening across the state, it doesn’t cause a slowdown.”
Prologis, a San Francisco-based REIT that invests in warehouses, also sees room for growth in warehouse development. Non-Amazon customers accounted for 85% of new e-commerce leases in the first quarter of 2022, up from 66% in 2020, according to a Prologis report.
Meanwhile, commercial real estate consultancy CBRE forecasts 850 million square feet of leasing in 2022, up from a record 1 billion square feet in 2021.
But if that prediction comes true, it would still be the second-highest rental year on record.
“In the market we are in, we are still seeing projects moving forward and space being leased out,” Smitana said. “It might end up being a little less, but we’re still working on new projects.”
Topics covered: business, infrastructure, design, sustainability, regulation, apartment buildings, etc.
The industry’s overheated job market began to cool, with the average builder’s wage rising to nearly $35 an hour.
The construction industry is now more than ever dependent on technology solutions as it faces a skills crisis and a global pandemic.
Topics covered: business, infrastructure, design, sustainability, regulation, apartment buildings, etc.
Topics covered: business, infrastructure, design, sustainability, regulation, apartment buildings, etc.
Topics covered: business, infrastructure, design, sustainability, regulation, apartment buildings, etc.
Topics covered: business, infrastructure, design, sustainability, regulation, apartment buildings, etc.
The industry’s overheated job market began to cool, with the average builder’s wage rising to almost $35 an hour.
The construction industry is now more than ever dependent on technology solutions as it faces a skills crisis and a global pandemic.
Topics covered: business, infrastructure, design, sustainability, regulation, apartment buildings, etc.