Amazon obviously has big and empty warehouse problems

The coronavirus pandemic has caused online sales to surge and the need to store more inventory, but the world is returning to normal and Amazon is clearly leaving too much warehouse capacity.

like Bloomberg Report(Opens in a new window), situation savvy, argues that Amazon should do something with more than 10 million square feet of warehouse storage space that is no longer needed (about the size of the company’s 12 largest fulfillment centers). Depending on the source you’re actually listening to, it can be three times that amount.

The solution is to sublease some space to a short-term contract (one to two years) while negotiating the termination of the existing lease to relieve the financial burden. Amazon seems to be hedging its bets in case demand surges again by renting out a lot of empty space or simply the entire business grows and needs more space again.

To put this downsizing in context and to remind everyone of the scale of the business Amazon operates, at the end of last year Amazon was leasing a 370 million square foot industrial estate in the United States. The excess space the company currently has is expected to reach $10 billion in additional costs, which makes it clear why Amazon wants to sign some sub-leases or end existing leases prematurely.

Amazon declined to comment on the matter with Bloomberg, but it is believed that real estate firm KBC Advisors was hired to figure out which spaces should be subleased or shut down. If Amazon’s recent report of turning shopping malls into glorious fulfillment centers turns out to be true, warehouse requirements could be cut even further.

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