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4.1 million-square-foot warehouse in California will be Amazon’s biggest ever

This five-story building under construction in Ontario, Calif., will be... (Watchara Phomicinda / The Press-Enterprise / SCNG / TNS)More

By

Jeff Collins

The Orange County Register

Rising from dairy lands east of Los Angeles, a boxy building with an “Alexa Blue” stripe soon will become the largest warehouse in Amazon’s logistics network.

At almost 4.1 million square feet, the five-story, 97-foot-tall behemoth now taking shape near Ontario, California, will have more space than any other Amazon warehouse in the world.

“That’s the biggest (Amazon warehouse) we see in our database,” said Marc Wulfraat, president of Canadian-based logistics consulting firm MWPVL International, which tracks the Seattle retailer’s distribution network.

Amazon on May 26 confirmed that the massive Ontario warehouse was part of its network.

Amazon signed a lease for the building last summer, and construction began soon after. A spokesperson for the builder, Prologis, said construction should be done by the end of the year, clearing the way for a new distribution and automation center to begin operations.

At that size, the new 4,055,890-square-foot structure — sitting atop a former cattle feedlot — will be almost as big as two 73-story Wilshire Grand Hotels, the tallest skyscraper in downtown Los Angeles.

Amazon’s new warehouse floor space, measuring some 93 acres, would hold all of Disney’s California Adventure theme park with 21 acres to spare.

But the future of the building and some of Amazon’s other distribution centers may be in doubt. An e-commerce boom that exploded during the pandemic slowed over the past year as people resumed shopping in stores, leaving Amazon with a $3.8 billion loss at the start of 2022, its first quarterly loss in seven years.

The setback prompted the online retail giant to curtail a two-year warehouse-acquisition binge.

Bloomberg News and The Wall Street Journal reported recently that Amazon now wants to shed 10 million to 30 million square feet from its warehouse network, either by subleasing some of its space or by terminating leases, possibly including those with Prologis.

CEO Andy Jassy said in Amazon’s first-quarter earnings report that it took the company 25 years to amass 193 million square feet of warehouse space but just two years to double its global network to 387 million square feet, 370 million of that in North America.

“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” Jassy said in the company’s April filing with the Securities and Exchange Commission. But, Jassy added, “we’re no longer chasing physical or staffing capacity.”

One real estate analyst speculated that Amazon will sublease space elsewhere in Southern California before it puts the new Ontario warehouse on the chopping block.

“I’m not sure they’d be able to find another single user for space of that size,” said Joshua Ohl, senior market analyst for real estate data firm CoStar Group. “From what I’ve heard, Amazon has been placing more of its older facilities on the sublease market that have less automation, fewer (high-level loading docks) and lower clear heights.”

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Wulfraat said that as Amazon increasingly expands its use of robotics, it needs more space to store the “pods” that hold merchandise.

“The more items you have, the more pods you need,” he said.

In a press release last August, Amazon said a new fulfillment center in Ontario would employ 1,500 people who will work alongside its robots as they pick, pack and ship smaller-sized items to customers.

If the facility is anything like a new, five-story warehouse just outside Wilmington, Delaware, robots could outnumber humans 10 to 1, according to the Philadelphia Inquirer.

At the Delaware warehouse, workers unload trucks and stow the contents in 8-foot-tall stacks of square yellow bins. Once in the bins, goods are ready for retrieval by robots, the Inquirer story said. Robotic vehicles are guided by optical and motion sensors, selecting and carrying Amazon merchandise from storage bins to delivery.

Amazon’s next-biggest warehouse after the Ontario building will be a 3.87 million-square-foot facility under construction in Loveland, Colorado, said Wulfratt, the MWPVL president. The company has eight other buildings in operation or under construction with at least 3.8 million square feet.

Jeff Collins