Colorado is finally getting an Amazon fulfillment center, and the Seattle-based retailer said the 1 million-square-foot facility in Aurora will result in faster delivery for area customers and the creation of 1,000 full-time jobs when it opens before the next holiday season.
The expansion means Denver shoppers could get two-hour delivery instead of waiting two days or more. And local developers and retail experts are busy predicting Amazon’s larger economic impact on the region.
“Amazon’s next goal is 30-minute delivery, which is a real threat to the convenience physical stores offer,” said Jon Nordmark, co-founder of Iterate.ai, a Denver company that matches retail tech startups with retailers. “This Aurora-based warehouse is one step closer to making that a reality. High-velocity items are likely to be staged there for shoppers throughout the Denver metropolitan area. Amazon will drive to your doorstep.”
With more and more people shopping online, local real estate professionals said more large e-commerce facilities are likely forthcoming.
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“This is just the beginning,” said Mike Wafer, executive managing director of Newmark Grubb Knight Frank in Denver. “We’re seeing a lot of activity.”
Amazon’s announcement Monday comes nearly a year after it began charging local customers sales tax. The company pulled back in Colorado in 2010 after the state legislature passed a law to force e-commerce companies to notify customers of sales tax owed to the state.
In April, the company announced it would open a 452,400-square-foot sortation center in Aurora, where packages would arrive from other Amazon locations and be delivered to local post offices for home delivery. That opened in June.
With the opening, local shoppers began receiving some items on Sundays. More changes are expected. Over the holidays, for example, Amazon offered 2-hour delivery on Christmas Eve to customers in 30 metro areas nationwide but not in Denver. Those other areas have warehouse facilities and offer Prime Now, which promises delivery within two hours of an order.
“There are a number of factors considered when choosing a location for a new fulfillment center,” Amazon spokeswoman Ashley Robinson said. “Primarily, we want to be as close to the customer as possible to ensure excellent Prime service, which includes fast delivery speeds and a wide selection of inventory.”
The new fulfillment center, on East 19th Avenue north of the Interstate 70/E-470 junction, is about 5 miles east of the existing Aurora sortation center.
Aurora also recently attracted Walmart, which acquired 169 acres south of Denver International Airport last summer, and expects a third “e-commerce-related” company to announce a move there soon, said Wendy Mitchell, president and CEO of Aurora’s Economic Development Council.
“One of the things we do in Aurora is if we have an employer and they have a very specific time frame that they need to be in operations because they are publicly traded or have a schedule dependent on the holidays, we can guarantee them all the approvals on a certain date,” Mitchell said. “…In a lot of cities, you’re on your own. You’re going through all these layers with no certainty. These Fortune 50 companies really like a time frame. I think that’s why we got picked twice.”
The Amazon site is part of Prologis Park 70, a 5.7-million-square-foot industrial park that spans both sides of E-470 north of I-70. General Motors’ Denver Parts Distribution Center, U.S. Foods, Furniture Row, O’Reilly Auto Parts, Mastercraft and Niagara Bottling also call the industrial park home.
Increasingly, companies are using warehouse space for e-commerce versus storage and distribution, said Wayne Barrett, vice president and Denver market officer for Prologis.
“You will see other companies come to town and do this. Whether they build 1 million square feet, I can’t say that — that’s a big building, especially in Denver — but I think you will definitely see more people building warehouses just for e-commerce,” Barrett said. “It’s the natural progression of the way people buy.”
Part of Denver’s appeal relates to geography, said Ann Sperling, senior director for Trammell Crow Co.’s Denver office, which is developing Crossroads Commerce Park on the site of the former Asarco smelter in Globeville.
“Colorado is somewhat unique in that our geography has always been more isolated than other large population centers,” Sperling said. “If you look at the increasing demand for quick delivery as well as ease of returns, we’re too far away from other large distributions areas to cover the demand.”
Amazon’s expansion will also impact the local job market. It is already hiring tech workers and is hunting for a downtown Denver office location. Most of the current jobs are at warehouses, where the company was criticized for working conditions in the past.
The company touts average pay at is warehouses that is 30 percent higher than what a traditional retail worker earns. Amazon currently employs “hundreds of associates” at the sortation center in Aurora, which when it opened offered a starting pay of $13 an hour with benefits that started after 90 days. The company said for fulfillment center employees, health care benefits start immediately, and it offers a 401(k) match and paid-time off.
Compensation varies throughout the country. For a job posting in Coppell, Texas, a full-time warehouse associate starts at $12 an hour. In Charleston, Tenn., pay starts at $11.50 an hour. In Kent, Wash., it’s $13.75.
“We will start the hiring process for hourly fulfillment center employees as the site gets closer to opening. Stay tuned,” Robinson said, referring interested applicants to Amazon’s job page at amazondelivers.jobs.
Date: January 24, 2017