Amazon looking to sublease at least 10 million square feet of warehouse space. Story first reported by Bloomberg.
Amazon admits that it "overinvested" in warehouse space by extrapolating demand trends it experienced following the pandemic.

Amazon is Prologis' largest tenant.

They are also considering terminating leases early.

Amazon engaged KBC Advisors to evaluate their portfolio of warehouse leases.

[Full story](https://archive.ph/7bM9X).
[{"id": "i9sngn4", "text": "Over expanding to pay less taxes, now coming back and biting as rent increases. Karma IMO.", "replies": [{"id": "i9v9w5p", "text": "You never finished your accounting classes did you?", "replies": [{"id": "i9vdkns", "text": "Nobody on reddit knows how taxes work. In their mind, rich people have an infinite money hack where they buy a ferrari as a business vehicle, write off the 200k, and magically have a free ferrari. More complex topics are even funnier. I've started keeping a bucket next to my desk because I swear some day my brain is going to leak out of my ears from reading reddit tax opinions.", "replies": [{"id": "i9vecmi", "text": "The key word is \"technically.\"  Nothing of value has ever been said after the word \"technically\"", "replies": [], "depth": 4}, {"id": "i9wo6dc", "text": "Do you think that he was referencing the state and local tax credits Amazon receives for having their HQs, warehouses, and distribution centers in particular jurisdictions?\n\nAmazon is notorious for having \"cash\" tax rates that are below statutory (\\~21%) tax rates. Accelerated depreciation (on owned property and equipment), state and local tax credits, and stock-based compensation accounting treatment *account* (pun intended) for much of the tax planning strategies Amazon employs to avoid paying domestic taxes.\n\nNothing is illegal about this, of course.\n\nYou can reference their 10-K for more information. By my calculations, they have paid about a fifth of the statutory tax rate in cash. Well done to Amazon, in my opinion.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i9t6ye6", "text": "Looks like most of the excess space are in tight markets that should be able to absorb the space quickly. I'd be more concerned if they start off-loading space in the sunbelt markets with insane dev pipelines.", "replies": [], "depth": 1}, {"id": "i9tc896", "text": "They are shedding 5% of the square footage that they added during the pandemic.  This is a drop in the bucket of their total sf.", "replies": [{"id": "i9v2c7z", "text": "Amazon was 50% of total absorption last 3 years. Going from that to subleasing space is going to be a huge fall in demand. \n\nIndustrial prices grew by 42% last year, while noi only grew by 10%. Investors were expecting continued strong NOI growth, which seems hard to expect now.\n\nStrong possibility of price loss this year, even with decent noi (4%-6%) growth.", "replies": [{"id": "i9ziez9", "text": "Correct answer. Also, 5% can be a misleading figure. Seems small but is actually quite big. For example, 5% inflation in a year is a problem.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i9v9sqm", "text": "No panic needed.  It's only for a few years.", "replies": [], "depth": 1}, {"id": "i9vd6bs", "text": "Doesnt sound bad to me. I'm buying a warehouse larger than what I need.\n\nI can afford it, I will need all the space eventually, and until I need it all I can sublease. I get to own a better property which will still appreciate and I dont have to move when I outgrow it, because I probably wont. If you can afford to overbuild for future capacity, doesnt hurt to do so and will probably be cheaper longterm.", "replies": [{"id": "i9zk6vs", "text": "I could be wrong but I thought Amazon was mostly leasing warehouse space. ie, they don't own the property. So any down time is simple dollars wasted on the lease term.\n\nSource: Amazon leases a parking lot from someone I know for delivery vehicles, and this person told me Amazon uses a leasing model for there many many small satellite operations. Even when they build big centers, they turn the property around into sale-leasebacks due to the value of their credit. Effectively they can print money from anything they build due to their perceived credit.", "replies": [{"id": "iaexz1p", "text": "The commenter above you stated how his current real estate scenarios work.  Not Amazons.  It was stated as a reference as to the concept.  Not Amazons rental or ownership structure.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i9wi8j4", "text": "Spoke with a national developer on this. He stated on their Amazon deals the left hand did not know what right hand was doing. No surprise given the size of the company and the crazy long lead times of construction. Couple of the other comments likes u/kicksnspliffs and u/anillop have good insights as well. Sucks for prologis but should ultimately be fine.", "replies": [], "depth": 1}]