Amazon executives want to double the number of same-day shipping centers in the U.S.
At the same time, a developer whose warehouse portfolio includes Visalia’s two other Amazon fulfillment centers broke ground Aug. 24 on a 1.27 million-square-foot building designed for delivery space.
Amazon representatives say the space isn’t being built for the company. And, Visalia Economic Development Director Devon Jones said he didn’t know if Amazon was expanding its distribution footprint there.
But sources familiar with the matter say it will become Amazon’s third warehouse in the city.
Development company CapRock Partners announced in a news release that it has begun construction on the first of four buildings in a center that will eventually total 2.7 million square feet. CapRock built the other two Amazon warehouses in Visalia.
“CapRock is excited to be underway in constructing the first building at CapRock Central Point III in Visalia, a vibrant industrial market and logistics hub providing unmatched connectivity in the heart of California’s Central Valley,” said Bob O’Neill, senior vice president of acquisitions at CapRock Partners. “CapRock has completed multiple large-scale facilities in Visalia catering to Fortune 100 corporations.”
The four-building campus is at 4001 N. Plaza Drive. The property is easily accessible to Highway 99, which connects to major interstates such as I-5 and I-80. It also is less than 40 miles to Fresno Yosemite International Airport.
Amazon Boosting Delivery Speeds, Even at Added Costs
Over the past few years, Amazon has been changing its delivery model from a centralized one to a more regionalized one, said Amazon CEO Andy Jassy in the company’s Aug. 3 investor call. That has meant adding more fulfillment centers throughout the country. It also means having inventory spread across the company’s eight regions.
“Sometimes I hear people make the argument Amazon is chasing faster speed while driving its costs higher. … This argument is incorrect,” Jassy said.
Jassy said he wants fulfillment centers closer to customers so goods travel shorter distances. Jassy said he wants to double the number of same-day shipping centers.
These centers store Amazon’s 100,000 best-selling items and are in the biggest U.S. metros.
“The experience has been so positive for customers in our business, that we’re planning to double the number of these facilities,” Jassy said. “We believe we are far from the law of diminishing returns in improving speed for customers.”
‘Convenience’ Has Driven Profit Rebound in 2023: Amazon CFO
While 2022 wasn’t a good year financially for the company, profits have rebounded. Stock in the company fell 51% in 2022, according to CNBC. Economists blamed inflation and interest rates on the decline. In 2022, Jassy blamed too much hiring and too many warehouses built.
However, executives attributed faster delivery speeds as the main reason profitability increased in 2023. Better delivery speeds were brought about in part by more fulfillment centers.
The company’s fiscal year 2023 global profits increased 11% to $134.4 billion. In the investor call, Amazon CFO Brian Olsavsky attributed the recovery to “price and convenience.”
Visalia’s Amazon footprint has exceeded that of Fresno’s since the first warehouse was built. The three Amazon centers in Fresno add up to 1.5 million square feet.
Visalia’s two existing Amazon warehouses total 2.46 million square feet, according to Jones. Adding the third warehouse would push that amount to 3.73 million square feet in Visalia.
CapRock Built Amazon’s Other Visalia Warehouses
CapRock developed Amazon’s two other distribution centers in Visalia, according to Jones, the city’s economic development manager.
Calls made to CapRock Partners for comment on this story were not immediately returned.
The building will be designed with logistics in mind.
With 274 dock doors and 40-foot ceilings, the building will accommodate regular truck traffic.
Designs for the other three buildings have been completed and approved, according to a news release.
“The groundbreaking of Building 1 at CapRock Central Point III represents Visalia’s advancement as a preferred location for distribution and an essential link in the U.S. logistics supply chain,” said Mike Fowler, executive managing director for real estate company Jones Lang LaSalle.
Regardless of the tenant, Jones said, investment in Visalia is good for the community.
“We are very fortunate to have quality industrial developers such as CapRock, Diversified Development Group, Seefried, G4, and YS Industries invested in our community,” Jones said in an email to GV Wire. “We will continue to work with our development partners and continue to capitalize on our strategic location in the middle of the 5th largest economy in the world, our incredibly hard-working regional workforce, and availability of shovel-ready zoned land to generate primary jobs for Visalia and the region.”