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Business Observer Friday, Sep. 4, 2020 3 weeks ago

Of Amazonian Proportions

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The Seattle-based online retailer, already one of the largest occupiers of industrial space in Central Florida, is preparing to expand significantly.
by: Kevin McQuaid Commercial Real Estate Editor

In terms of its industrial space footprint, “The Everything Store” already is seemingly everywhere along the Gulf Coast and the Interstate 4 Corridor throughout Central Florida.

In Lakeland and Ruskin, Amazon occupies a pair of 1 million-square-foot distribution centers, while in Fort Myers, its roughly 100,000 square feet of space makes it among Southwest Florida’s largest industrial tenants.

But fueled by the COVID-19 pandemic and macro-economic trends toward online shopping and home delivery, the Seattle-based online behemoth is poised to expand with at least a half a dozen new fulfillment and delivery locations in Polk, Hillsborough, Pasco, Sarasota and Lee counties.

In all, Amazon currently occupies about 5.3 million square feet regionally in more than a dozen separate facilities within the region, based on statistics compiled by commercial real estate brokerage firm Colliers International Tampa Bay, Central and Southwest Florida.

Plans now in place, however, could nearly double that figure by 2022 — with possible expansions available, according to a Business Observer analysis of the company’s anticipated space needs.

Most recently, Amazon unveiled plans to add a Temple Terrace location to its growing portfolio — a 633,000-square-foot building that will likely be the most technologically advanced warehouse in the region.

Because the building will rise nearly 90 feet, or more than four stories in height, its true efficiency will have to be measured in cubic, rather than square, feet.

Ultimately, then, the project could contain as much as 1.4 million square feet of space by using that measurement and depending on the types of mezzanines and conveyor equipment that is installed.

“We’re excited to be growing our operations in Florida and we are excited to open a new fulfillment center in Temple Terrace,” says Amazon Vice President of Global Customer Fulfillment Alicia Boler Davis, in a statement.

Although the planned Hillsborough County logistics center on 82 acres that is being developed by Atlanta’s Seefried Industrial Properties will be the company’s most prominent, it isn’t the only new Amazon project that’s been proposed.

Earlier this summer, Minneapolis-based Ryan Cos. U.S. Inc. acquired a 46-acre tract in Land O’ Lakes, in Pasco County, for $8.75 million. There, the company is expected to build a roughly 110,000-square-foot distribution center for Amazon, with whom the developer is a preferred national builder.

Ryan Cos. is expected to deliver the roughly $30 million distribution project, at 17030 Mentmore Blvd., in mid-2021.

Ryan Cos. also is constructing a roughly 120,000-square-foot industrial building in the North Port area of Sarasota County on behalf of Amazon.

Company officials in Tampa declined to comment on the firm’s work with Amazon, and Seefried Industrial executive Paul Seefried, who oversees the Georgia company’s Florida operations, did not return a call for comment.

Amazon is also expanding its operations elsewhere in Hillsborough, too. In Seffner, east of Tampa, the company will soon occupy a 424,500-square-foot building in the Interstate 4 Logistics Center.

To the east, Amazon this summer also kicked off logistics operations at the Lakeland Linder International Airport, in Polk County, after striking a deal for a potential 50-year lease in May 2019.

There, Amazon currently maintains a 285,000-square-foot package and cargo sorting operation of packages from up to eight incoming flights daily. Future plans could swell the e-commerce giant’s space to more than 1 million square feet on its 47 leased acres, though, as it shifts operations away from Tampa International Airport within the next two years.

Amazon also has an option to lease another 62 acres at the airport as part of its agreement. In all, the company is expected to invest in excess of $100 million into its facilities at Lakeland Linder.

Still further east, Amazon is slated to occupy another 1.4 million-square-foot fulfillment center in Deltona, northeast of Orlando, upon completion later this year. The Volusia County building currently ranks as the largest industrial space under construction in Florida, according to a Commercial Café report earlier this year.

“Amazon has proven itself to be leaps and bounds above all other e-commerce purveyors, and they’ve revolutionized logistics and, for the consumer, life,” says Ryan Vaught, an executive managing director of industrial services for commercial real estate brokerage firm Colliers International, in Tampa.

COURTESY PHOTO -- Ryan Vaught, an executive managing director at Colliers International, believes Amazon may require as much as 12 million square feet of industrial space in the region.

“One of the reasons we’re seeing so many new projects is because Amazon has become so sensitive to both time and miles, and because technology is changing so rapidly and only speeding up,” Vaught adds.

Evidence of that sensitivity became clearer in June 2019, when Amazon unveiled that it intended to begin free-one-day shipping of some 10 million products to its Amazon Prime members in select cities.

In addition, Amazon indicated that it would spend close to $1 billion to halve its delivery time for consumers throughout North America.

To that end, Amazon in early 2019 established a 60,000-square-foot “last-mile” distribution center in the Airport Woods Commerce Center, in Fort Myers, Lee County, roughly four miles from the Southwest Florida International Airport.

Amazon also is in the process of converting a former Benderson Development Co. retail site into a fulfillment operation in Lee County to expand its presence there.

The company’s surge also has fueled investor interest in Amazon-occupied buildings in Florida over the past year.

Most notably, Amazon’s 1.02 million-square-foot fulfillment center in Ruskin, in Hillsborough County, sold in May 2019 for $123.6 million — one of the largest commercial real estate transactions in the Tampa Bay area that year.

Industrial Logistics Properties Trust, of Massachusetts, acquired the building as part of an 18-asset portfolio deal. Amazon has occupied the space since USAA Real Estate completed it in 2013.

COURTESY PHOTO -- A Massachusetts firm paid $123.6 million for an Amazon-occupied distribution building in Ruskin last year, one of the largest transactions in Tampa Bay in 2019.

Even with all the growth, Amazon likely hasn’t come close to saturating the Gulf Coast and Central Florida markets, analysts say.

That’s because currently online shopping accounts for just 12% of all retail sales nationwide. If the trend continues on its current trajectory, Vaught believes that Amazon will need around 12 million square feet of space regionally — based on a formula that the company needs about 100,000 square feet of industrial space for a population of 100,000.

He expects future Amazon facilities, however, to be smaller and in more urban locations in keeping with the company’s “last mile” delivery philosophy.

“The other thing to keep in mind is that even with all of their growth of late, Amazon still isn’t the largest occupier of industrial real estate in the region,” Vaught says. “That’s Walmart. So my expectation is that if Amazon continues on their current growth path — and I don’t have any reason to suspect they won’t — then they still have a long way to go here in regards to fulfillment space.”

The company’s biggest challenge, Vaught and others say, is available land with necessary roadworks and other infrastructure in place.

“The hardest thing about e-commerce delivery facilities is they require so much land for trucks and vehicle parking,” Vaught says.

 

 

 

 

 

 

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