The Gift That Keeps On Giving

This article originally appeared in our newsletter from the 16th June 2022.

Everyone wants to get in with Amazon.

Data centres, warehouses, retail outlets. They seem to be the gift that keeps on giving to contractors.

But..

Last month, Jeff Bezo’s army announced to the world that they are discarding 10 million square feet of warehouse space. Stagnating growth and uncertain profit projections are the reason for pausing their warehouse expansion plans according to Bloomberg.

 

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Contrary to what you might think, this isn’t all that bad for the construction industry. Amazon likes to purchase everything in production all at once. And when major players like them take a break, it tends to free up scarce materials; roofing components, insulation, precast and steel.

Lead times decrease & costs begin to come down according to Tom Belanich of Messer Construction based in the US.

My buddies at Dodge Data & Analytics told me that Amazon was the largest builder of warehouses for the past three years, totalling £8.3 billion, or about 6% of global construction activity. Impressive to say the least!!

Now, the warehouse market will take a hit. Let’s not pretend everything is all rosy. But, there is plenty of other work to go around. Earlier this year, Amazon announced that their AWS subsidiary is investing £1.8bn into building and operating data centres around the UK.

Since launching the AWS London Region in December 2016, their investment has more than doubled.

Who uses these data centres?

Well every one of us that uses AWS services. But, think major firms: AstraZeneca, Barclays, EasyJet, EDF, Formula 1, Just Eat. All these companies badly need AWS data centres to lower their costs, become more agile, and innovate faster. And COVID only accelerated this!

And what does this mean for contractors?

It means after an uncertain week in “The City”, it seems it’s not all doom & gloom out there. The backlog of government and infrastructural projects (like date centres) need to keep on moving for the UK economy to survive. I wouldn’t worry just yet.

And before I go. Is it “Date centres” or “Data centers”? 😂

– Richard Allan (new reporter for Construction Wave)