Industrial Real Estate Investors Keeping a Close Eye on Amazon

Seattle-based Amazon has a whopping 39% share of online commerce, but its growth has plateaued in that sector, with one of the worst six-month stretches in the company’s history. Real estate firm Lee & Associates has released a report examining Amazon’s online-shopping stagnation and how it may affect industrial real estate.

Amazon has reported excess capacity that cost about $2 billion in “incremental costs” during the first quarter when the company reported a $3.8 billion net loss. Amazon is halting industrial leasing for 2022, and has subleased a 300,000-square-foot facility in the Bay Area. The company’s strategy has changed, and is now buying land to develop its own sites.

While Amazon’s online sales numbers have dwindled, the overall sector remains solid. The Census Bureau estimates that e-commerce sales in the second quarter of 2022 increased 2.7% from Q1 and 6.8% from a year ago. The report also indicates that despite Amazon’s changing strategy, industrial buildings remain in high demand, thanks to other companies like Walmart and FedEx. 

The industrial market may not be as explosive as it once was, but it remains strong as e-commerce is here to stay.