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Jan 31, 2017

New Amazon Fulfillment Center Set for Construction in Colorado

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In yet another step to speed up its regional delivery time, the electronic commerce giant Amazon has announced that it is going to build a new 1 million square-foot fulfillment center in Aurora, Colorado.

“This is very much a big deal, one of the largest buildings that will be built in the metro area here in the last 20 or 30 years,” says Yuri Gorlov, vice-president of the Aurora Economic Development Council, which worked with Amazon to get it to secure the project for Aurora.

The center will go up on East 19th Avenue inside the sprawling 5.7 million square-foot Prologis Park 70, a master-planned industrial park that is home to a growing number of distribution centers.

The announcement of the fulfillment center’s construction was only naturally regarded as good news by an array of Colorado leaders, including Governor John Hickenlooper, who, noting that Amazon had opened a 452,000 square-foot sorting center last summer, said “It’s always great news when a company as innovative as Amazon makes an investment in Colorado.”

The sorting center was opened at 19799 E. 36th Drive, roughly five miles south of the Denver International Airport, and is part of an expanding national network of more than two dozen Amazon sorting centers, typically measuring from 200,000 to more than 300,000 square feet.

The fulfillment centers are typically larger, starting at around 800,000 square feet.

The Internet-based retailer, whose headquarters are in Seattle, has been building out its fulfillment center system in recent months with a new 800,000 square-foot facility in Jacksonville, Florida; a 1 million square-foot facility in Coppell, Texas; and a 1.2 million square-foot center in northeast, Maryland.  

To date, the company has more than 20 fulfillment centers in California and Texas; and more than 10 in Florida, Pennsylvania, and Illinois.

The new Aurora facility most likely means that “Amazon has enough data on customer purchases that it can reduce long-haul shipping costs of small parcels and fill more orders closer to the point of demand,” says Paul Rosenblum, an analyst and managing partner with Retail Systems Research.

“I think we can’t overstate the importance to Amazon in reducing shipping costs,” continues Rosenblum, who notes that Amazon’s Prime Now service has the potential to be one of the company’s most profitable lines of business.

“They spend less money on ‘industrial strength’ shipping cartons, and actually deliver most product in paper bags by car,” Rosenblum says. “That’s a huge savings.”

The new Aurora facility comes after the company early last year decided to charge a sales tax to its customers in Colorado.

“Once that happened, I think that meant that they had a plan to enter the Colorado market,” says Gorlov.

Reports indicate that as many as 1,000 new jobs will be created with the construction and opening of the Aurora center. Nationally, according to the New York Times, the company plans to hire more than 100,000 full-time workers for its various facilities between now and mid-2018.

While Aurora and Colorado officials worked with Amazon on a number of issues to secure the new fulfillment center, the deal may have been clinched when the City of Aurora agreed to expedite its permitting process to build the facility.

“All of this took a few different levels to go through,” says Gorlov. “But once the concept was out of the ground, the process went very quickly.”

“I think the whole idea is for them to be able to have this building up and ready to go very soon in order to get ready for the next cycles of the holiday shopping season,” he adds.

 

By Garry Boulard

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