Boom, Pushback, Slowdown: A Warehouse Nation

As the United States emerged from the Great Recession of 2008-2009, there was this collision of forces: cheap real estate and the rise of e-commerce. The result was a warehousing boom that continues to change this country's industrial landscape.

Construction skyrocketed as Amazon and others began building million-square-foot distribution centers. Since 2011, an estimated 2.3 billion square feet of new warehouse space has come to market.

We created coal country, steel cities, and oil and gas towns from our past industrial booms. Now warehouse boomtowns are shooting up in California's Inland Empire, Pennsylvania's Lehigh County, and in and around Columbus, Ohio.

Satellite photography from the past 20 years shows warehouses have transformed the American landscape in states like California, Texas, and Washington. Warehouses continue to spring up in city centers and affluent neighborhoods.

As warehouses have multiplied, the industry's workforce has nearly tripled to 1.8 million since 2010. The rise of online shopping has intensified demand, since e-commerce warehouses need about three times as many workers as a wholesale warehouse of a similar size.

Nationwide, warehouse rent prices have more than doubled since 2010, while vacancy rates have plunged to historic lows. Supply can't keep up with demand. The?rise of online shopping has intensified demand since e-commerce warehouses need about three times as many workers as a wholesale warehouse of a similar size.

But all that warehouse development has sparked pushback in a growing number of cities. People have been rebelling against distribution centers being closer to their neighborhoods, contending that warehouses bring noise, pollution, and heavy-duty trucks to local roads. They speak out at local meetings and on Facebook, file lawsuits, and create GoFundMe campaigns to counter the warehouse boom.

In California’s Inland Empire, one of the largest industrial markets in the nation, local officials have passed moratoriums on warehouse development in several cities over the last two years. Colton, Calif., has extended a moratorium against building distribution warehouses three times since May 2021.

The construction bans allow time to study the impacts of the facilities on the community, like pollution, the proximity of the facilities to homes, and truck traffic. Since the early 1990s, the number of warehouses in the Inland Empire has grown from 650 to nearly 4,000 as of last year, per BusinessInsider.

The mounting opposition has developers and logistics operators turning more often to public affairs firms to counter the resistance by touting job creation and boons to local economies.

It should be noted, however, that these newly created warehouse jobs are on the lower spectrum of pay. The average hourly wage for a Warehouse Worker I in the U.S. is $17 as of December 27, 2022, but the range typically falls between $15 and $18. The average Warehouse Worker I salary in Dallas, where I live, is $34,148 as of December 27, 2022, but the range typically falls between $30,800 and $37,735.

Companies added more than 1.6 billion square feet of new industrial space across the country from 2017 through the end of the first quarter this year, according to real estate services firm Cushman & Wakefield, in what has been an unrelenting drive to get goods closer to customers and get it to them faster.

But warehouses or distribution centers as they are frequently called have proved to be a double-edged sword for many communities. They?can bring new jobs but they can also severely strain local infrastructure and?the human body. The rate of injury in warehouses is higher?than in mining, construction, or logging. Some unions see the pace and danger of warehouse work as a chance to mobilize.

Amazon Dominates But Pulls Back Some

Amazon's warehouse footprint ballooned over the past decade, with the pandemic kicking things into overdrive. The analyst Marc Wulfraat estimates that Amazon built 356 new warehouses in the US in 2021 — nearly one warehouse a day.

But now Amazon realizes that all this past building has left it with too much space. According to estimates?from MWPVL International, a consulting firm that specializes in supply chain, logistics and distribution, it may take three years for Amazon to recover from a pandemic-era warehouse expansion binge. Amazon refutes that, calling MWPVL's analysis "pure fiction."

In 2022, Amazon grew its warehouse footprint by 52 million square feet, less than half the capacity it added in each of the two previous years, MWPVL President Marc Wulfraat said in a recent call with brokerage firm Evercore. Amazon grew its warehouse footprint by 125 million square feet in 2020 and 137 million square feet in 2021, Wulfraat estimated.

The pullback last year came in response to a slowdown in growth and a deteriorating global economy. Amazon delayed or canceled certain warehouse openings while shutting down a number of projects and downsizing its total workforce. Amazon saved up to $4 billion last year when it scaled back warehouse expansion plans, according to Wulfraat. The company recently announced 18,000 job cuts.

Despite the slowdown, Amazon's warehouse growth last year was still big relative to Walmart, whose total US warehouse footprint is estimated to be roughly 150 million square feet. In other words, Amazon's new warehouse space from last year alone was roughly a third of what Walmart has added throughout its entire history.?

Amazon employs about 700,000 people in its warehouses, more than any other company in the U.S. To keep its warehouses staffed, Amazon was hiring on average 2,800 people a day, or over half a million people, in the second half of 2021.

It churns through workers at an incredible rate. A leaked memo from 2021,?first reported by Recode, showed Amazon warehouses had an annual turnover of 159 percent in 2020. That same memo predicted Amazon would exhaust the warehousing labor pool in certain cities by 2024.

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