Amazon seeking to offload warehouse space as ecommerce boom wanes

Amazon is seeking to offload more than 10 million square feet of warehouse space, as the ecommerce boom begins to wane, according to a report by Bloomberg.

As the demand surged for online purchases during the pandemic, Amazon commandeered warehouse space around the world and significantly expanded its operations.

However, according to the report, the ecommerce giant has found itself with an overabundance of space, as consumer habits shift once more.

The excess capacity reportedly includes warehouses in New York, New Jersey, Southern California and Atlanta.

The 10 million square feet that Amazon is looking to sublet is roughly equivalent to about 12 of its largest fulfilment centres, or approximately 5% of the square footage added during the pandemic.

According to Bloomberg, this indicates that the company is proceeding with caution, should demand quickly rebound. In addition, some of the sublet terms with reportedly last just one or two years.

READ MORE: Amazon is cutting back hiring targets in its retail business as inflation rises

Amazon declined to say which space it plans to sublet or confirm the amount.

“Subleasing is a very common real estate practice,” Amazon spokeswoman Alisa Carroll told Bloomberg.

“It allows us to relieve the financial obligations associated with an existing building that no longer meets our needs. Subleasing is something many established corporations do to help manage their real estate portfolio.”

Last month, Amazon caused investors concern after reporting slowing growth and a weak profit outlook, which it said was due to overbuilding during the pandemic.

At the end of 2021, the company leased 370 million square feet of industrial space in its home market, twice as much as it had two years prior.

Amazon also said it anticipated the excess space to contribute to $10bn in additional costs in the first half of 2022, according to its April earnings report.

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