USA: Empty warehouses a poignant reminder of dotcom failures
Following the closure of many dotcom trading companies, an increasing number of warehouses are lying empty in the US. Vacancy rates for industrial warehouses rose to 6.9% in the second quarter of 2001, compared with 5.7% in the same period last year, reported Dallas real-estate service Cushman & Wakefield.
Ambitious growth plans by new economy companies saw the construction or lease of large warehouses that in many cases were never fully utilised and are now sitting empty. Given the much-speculated-upon onset of economic recession, many of these facilities are unlikely to find new buyers or tenants.
A large number of the warehouses in question are huge, up to 800,000 sq ft, although most can be split into smaller units. The biggest problem with those used by grocers such as Webvan, which declared bankruptcy last month, is that they often boast highly specialised refrigeration systems to keep products at low temperatures. This limits their interest to potential leaseholders.
Webvan alone leased over five million sq ft of warehouse space before it suspended operations, reported the Wall Street Journal. "We ended up leasing a lot more than we ended up needing," said Allen Arthur, director of real estate at Webvan - one of the great understatements of the month.
Beleaguered food retailers are not the only ones with too much warehouse space on their hands. Even Amazon.com, one of the oldest and most established dotcom retailers, has consolidated warehouse space, closing an 800,000 sq ft distribution centre in May to trim costs. The property remains on the sublease market.
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