According to research by MWPVL, a specialized supply chain, logistics and distribution consulting firm based in Montreal, Quebec, Amazon facilities account for more than 12 million square feet spread among 32 facilities in Arizona, with more facilities in the works.
How Amazon has impacted the Arizona economy
You’re not mistaken if you feel like you’re seeing a new Amazon fulfillment or delivery facility pop up every few months in Arizona — specifically, the Greater Phoenix market. In fact, the company is on pace to average one new facility each month in the market during 2020, with 12 new locations beginning operations during the calendar year and three more facilities ready to come online in 2021.
“Growth and expansion is based on demand. Amazon’s business continues to grow exponentially, and with it, Greater Phoenix is a beneficiary,” said Chris Camacho, president and CEO of the Greater Phoenix Economic Council. “Greater Phoenix is the perfect location for distribution because of our infrastructure, talent pool, low business costs and advantageous operating environment. Businesses in Greater Phoenix can serve more than 33 million consumers in a single days truck haul, our shipping costs to California are up to 75 percent cheaper than other Mountain West markets and we have the third largest labor pool in the western U.S.”
Relative to population, Arizona was Amazon’s most active market in 2020, which was the most active the company has been in the state. Since 2017, Amazon has opened 20 facilities in Arizona, and according to Amazon spokesperson Lisa Guinn, the number of full- and part-time employees will be more than 20,000 statewide by the end of 2020 and those numbers grow each year. All of this growth in the market has taken just 13 years from the time Amazon opened its first facility in the state in 2007.
“Due to the nature of its business, Amazon has quite a significant footprint statewide,” said Sandra Watson, president and CEO of the Arizona Commerce Authority. “For example, just recently the company announced expansion plans in several Arizona cities — Avondale, Chandler, Goodyear, Mesa, Phoenix and Tempe. These new sites in the Phoenix metro area will support customer fulfillment and delivery operations. It’s a large-scale undertaking, and we are grateful for the company’s continued investment in Arizona.”
Amazon also announced plans for a 90,000 square foot Phoenix Tech Hub expansion at 100 Mill in Tempe, which will bring more than 500 new jobs to the community.
“Amazon more than doubled its workforce in Arizona between 2017 and 2020,” said Camacho. “Since 2010, Amazon has invested more than $11 billion in Arizona and added more than $9 billion into Arizona’s GDP. Additionally, there are more than 10,000 small and medium business sellers and independent authors in Arizona that are growing their business with Amazon.”
“Whether it’s food, drink, e-commerce, industrial distribution, UPS, FedEx; this Valley has been such a beneficiary and is going to continue to be thanks to e-commerce,” added Chuck Carefoot, senior vice president of construction for the Southwest Region for Ryan Companies US, Inc., which completed an 857,000 square foot Tucson facility for Amazon in May of 2019. “I think we’re in for some good times.”
Amazon’s rapid growth has corresponded with equally rapid growth in Arizona, as well as a maturing commercial real estate market, which is seeing a huge influx of warehouse, distribution and manufacturing facilities.
“Amazon is proud to be an active member of the Arizona business community,” Guinn said. “We appreciate the strong, long-standing support we’ve received from local and state leaders as we continue to grow and make investments to support Arizona’s communities. There are many contributing factors that go into our thought process as we decide where to place new buildings to support our operations network. We look at the workforce and community partners and know there is an abundance of talent across the state.”
Since the majority of Amazon facilities are similar to one another, it would be understandable if the company contracted the work on those buildings to a small pool of companies in order to maintain consistency. However, Amazon does just the opposite, spreading business around to many developers and general contractors, who in turn utilize the services of many different architects, engineers and other professional services companies.
Amazon has recently opened facilities that were built by Graycor Construction, Layton Construction, Ryan Companies US, Inc., The Renaissance Companies and Willmeng, and were developed by Irwin G. Pasternack, AIA + Associates; Lincoln Property Company; Prologis; Seefried Industrial Properties, Inc. and The Opus Group. And these are just a few of the companies that have developed or built one of Amazon’s 29 active facilities in Arizona.
Carefoot feels that this approach to development by Amazon is similar to how Ryan Companies tries to cultivate a deep roster of subcontractors in order to have a strong reach in the market.
“Ryan is stronger because we have depth in our subcontractor base,” Carefoot said. “I see that in our national customers who are like Amazon on the e-commerce distribution side of the equation. And like us, they are an essential service, so it’s vital that none of us put all of our eggs in one basket.”
“The evolution within Amazon at a facility level is staggering in the scope and breadth,” said Chelsea Porter, director of marketing for The Renaissance Companies. “With their pace of hiring and opening new locations, our team is often the most experienced team member in a facility, and called on to lead the planning and coordination efforts for the project. Of course, all work must be completed without impacting a 24/7/365 operation, one that will likely be handling a higher volume at the end of that project than when we started planning.”
While many of the facilities may have the same basic shell, Amazon has continued to improve on how its facilities operate, which challenges builders.
“Change is truly the norm within Amazon and they expect their contractors to not only deal with it, but to embrace it and be an active part and contributor to it,” added Porter. “The variety of project type also runs the gamut from improving package flow and handling in a sort or last mile building, to employee area improvements, to a state of the art secure operations and data center. Amazon challenges us to always think outside of the box and to be innovators.”
By 2022, Amazon is expected to employ more than 22,000 people in Arizona, which would make it one of the largest employers in the state. The company has developed very robust training and career development programs for its employees. The goal of the programs is to provide skills training to warehouse associates in order for them to advance into higher-paid, in-demand positions at Amazon or outside companies.
Amazon’s Career Choice program provides tuition and fee support for employees who are working towards certification or a diploma in qualified fields of study, including transportation, healthcare, mechanical and skilled trades and IT & computer science. The program offers on-site classes to make it easier for associates to take part. Amazon also has its A2Tech (associate to technician) program that launched in 2016 and is designed to give fulfillment center associates the training and industry certification to move into a more highly skilled IT career.