Amazon may now have too much warehouse space, as the pandemic fuelled enthusiasm for ecommerce has slowly cooled off.
The retail giant could be set to start subletting over 10 million square feet of space and could potentially even vacate more by ending leases with landlords, according to sources reported by Bloomberg.
The excess space issues are affecting warehouses in New York, New Jersey, Southern California, and Atlanta, the anonymous sources have said.
How big is the problem?
Amazon’s excess space issue could exceed 10 million square feet according to two of sources, with one source claiming it could be triple that.
Amazon did not comment on the exact quantity of the surfeit of space, but Amazon spokesperson Alisa Carroll told the Associated Press the move will “relieve the financial obligations associated with an existing building that no longer meets its needs”.
“Subleasing is something many established corporations do to help manage their real estate portfolio,” Carroll added.
The reports come as Amazon seems to be adjusting to an atmosphere of lower growth post pandemic
The news comes after Amazon reported a net loss of $3.8 billion in the first quarter of the year, its first since 2015, compared to an income of $8.1 billion in the same period of 2021.
However, sales did increase by 7% to $116.4 billion in the quarter, compared to 44% growth in the same period of 2021.
Amazon’s cloud hosting division Amazon Web Services (AWS) demonstrated stellar performance however, reporting 32% revenue growth in its first quarter.
“Today, as we’re no longer chasing physical or staffing capacity, our teams are squarely focused on improving productivity and cost efficiencies throughout our fulfillment network,” said CEO Andy Jassy in Amazon’s most recent earnings report. “We know how to do this and have done it before.”
“This may take some time, particularly as we work through ongoing inflationary and supply chain pressures, but we see encouraging progress on a number of customer experience dimensions, including delivery speed performance as we’re now approaching levels not seen since the months immediately preceding the pandemic in early 2020.”
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