Construction Industry Trends: June 2022 Roundup

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Phil Puccio

Amazon is withdrawing its commitment to build new giant warehouses like this one in Everett, Washington. That may be good news for other contractors in terms of material costs and supply chains.

Online retail giant Amazon is reportedly reducing plans to build or maintain 10 million square feet of warehouse space. This follows a period of slow growth and weaker than expected profit margins Bloomberg is credited with overbuilding. That may sound negative for potential construction prospects, but Construction Dive takes note of that decision could actually be good news for contractors.

Amazon’s withdrawal could mean a little breathing space in the construction supply chain — particularly for hard-to-find materials like roofing components, prefabs and steel, and electrical and mechanical equipment. “As Amazon ramped up, was extremely active and was building new facilities, the lead times for these materials started to get longer and longer,” said Tom Belanich, industrial director at Ohio-based Messer Construction. “Then, of course, the demand for it increased significantly, which led to a rise in the price.”

During the pandemic, Amazon invested heavily in warehouse construction — more than $10 billion, or 6% of total construction activity, according to Dodge Data & Analytics. As part of that spending, the company hoarded construction materials, further straining supply chains. Other contractors, Construction Dive says, also began hoarding materials, which helped drive up prices and shrink viable supply chains.

take that away: This is a good/bad news scenario. Nobody likes to see progress, and warehouse construction will remain one of the most important hardware markets for the foreseeable future. However, with thousands of other needed projects on backlog, any kinks in the supply chain hose are welcome news. Contractors in all sectors have certainly had to adapt during the pandemic, and many have turned to modern construction technologies to streamline material sourcing and reduce costly waste.

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