Amazon says ooops, we overbuilt

May 24 – You know all those Amazon warehouses that cropped up pretty much everywhere over the last few years? Turns out the company doesn’t actually need all that space.

Today’s Wall Street Journal reported that Amazon announced that they have overbuilt and have too much capacity. The plans are to sublet their own warehouses to reduce the excess capacity.

They have not yet identified where the warehouses are, but the sublease spaces will be a minimum of 10 million square feet.

Attorney Clint Barkdoll said, “That is a lot of warehouse space. Management is saying they need to right-size their warehouse inventory because they’ve just been building way too much.”

It remains to be seen if this announcement will affect any of the Amazon warehouses locally.

If they do start subletting them, will any business even want a 10 million square foot facility?

Pat Ryan of NewsTalk 103.7FM quipped, “If we’re subletting, you could put a rave out there, right? But you better be careful because if you put a rave out there, monkeypox could be spread. We’ve got to be careful out here. Please, Jeff, be very mindful of raves in subleased space that could lead to more monkeypox.”

The reporting out of Europe is that raves may have contributed to the spread of monkeypox.

Barkdoll laughed, “Let’s hope these warehouse subleases will be more industrial-type purposes. We’ll see.”

Michele Jansen of NewsTalk 103.7FM said, “Let’s talk about the real reasons why this is happening. Because the economy is dying. They say their ecommerce is just going down. No wonder because the cost of everything is going up. So all this crazy buying online that we all got used to and people are loving, now they’re finding out well I can’t afford as much and I’m not going to be getting as much. We’re going to see this everywhere, aren’t we? Everything’s just going to start slowing down because everything’s getting too expensive.”

Barkdoll said, “I think it’s a trend that people need to keep an eye on.”

This year, Amazon reported their first quarterly loss in seven years. There were also very weak earnings from Target and Walmart recently and the broader markets declined as a result.

Inflationary pressures are contributing to all of this.

Barkdoll noted, “You drive around the country, Amazon probably more than any other retailer, they have scaled up very quickly these warehouse operations all over the country. I think it’s a pretty remarkable acknowledgment for them to come out and say we got it wrong. We have overbuilt and now have way too much surplus capacity and to now make it economically viable, we need to sublease these warehouses, some of which are very new. It’s an interesting trend.”

Ryan said, “I don’t think Amazon got it wrong. I think the folks that put Joe Biden into office got it wrong.”