Amazon has opened its second Wallingford distribution facility, adding to the e-commerce giant’s growing presence in Connecticut.
The new facility is an 83,000-square-foot delivery center to serve what Amazon describes as “the last mile” in getting customers’ orders to them.
Amazon’s plans to occupy an existing warehouse at 425 S. Cherry St. became public in March. The new facility is adding more than 150 full- and part-time associate jobs to the local economy.
“I think it’s a good reflection on the town and on the (mayor’s) administration,” said Joe Mirra, chairman of the town’s Economic Development Commission.
Company officials said that since 2010, Amazon has created more than 8,500 jobs in Connecticut. Amazon invested more than $2.1 billion across the state, including infrastructure and employee compensation, Emily Hawkins, a regional spokeswoman for Amazon, said.
Amazon’s investments have contributed an additional $1.7 billion to the Connecticut economy and have helped create 4,400 indirect jobs in addition to the company’s direct hires, according to Hawkins. These include jobs in construction and logistics to professional services.
Much of the company’s focus in developing distribution infrastructure has been focused on the New Haven area.
In addition to the new delivery center, the company has “fulfillment centers” on Research Parkway in Wallingford and off of Washington Avenue in North Haven. The company already has delivery stations in Trumbull and Stratford and will open a new one in Orange in October, according to Hawkins.
In all, the company has more than 3 million square feet in 10 communities across the state.
“We have hundreds of full- and part-time employees at our sorting center in Wallingford and more than 2,000 full-time employees at our robotics fulfillment center in North Haven,” Hawkins said.
The Wallingford sorting center opened at the end of 2015. Sorting centers receive packages from fulfillment centers, sort them by final destination then load them onto trucks for delivery.
The North Haven facility opened in July 2019 .
Mirra said he’s not concerned that by having a concentration of Amazon facilities in Wallingford, the town’s economy is becoming overly dependent on the company’s success.
“I don’t see that happening,” Mirra said of a possible downturn for the company. “This type of facility (the one on Cherry Street) is their future. They’re a stable company.”
Even in a dramatic economic downturn such as the one Connecticut and the United States are experiencing as a result of the response to the coronavirus pandemic, economic development and logistics experts agree Amazon is in an enviable position.
John Boyd, whose Princeton, N.J.-based company evaluates locations for many of the nation’s corporate behemoths, said because the pandemic has created “basement level pricing of commercial properties, Amazon is one of the few companies that has deep enough pockets to take advantage of this opportunity.”
“There’s a lot of commercial real estate that will become vacant in the weeks and months ahead,” Boyd said. “And that makes Amazon a force to be reckoned with.”
Amazon has been in negotiations with Simon Property Group, the nation’s largest mall owner, about turning some of the vacant anchor store spaces into fulfillment centers, he said. Simon owns the Crystal Mall in Waterford and the Clinton Crossing outlet center in Clinton.
Connecticut is an attractive place for Amazon to open warehouses, Boyd said, because “the market from Boston to Richmond, Va., is one of the wealthiest and largest consumer markets in the world.”
“Connecticut’s warehousing costs are competitive compared to New York and Boston,” he said.
Boyd’s firm recently compiled a report that identified Windsor, near Bradley International Airport, as one of the top 25 suburban distribution markets on the East Coast.
“It’s 13 percent cheaper than Staten Island,” he said. “And in this business, it’s all about speed, about being close to where your customers are and proximity to large population clusters because people have become more comfortable buying products online because of the pandemic.”
Boyd said Amazon’s decision to open two warehousing facilities in Wallingford is driven by data garnered from consumer buying decisions.
“Amazon is very smart in that way, so they wouldn’t be doing this (without) being convinced about the strength and viability of e-commerce moving forward,” he said.
“The last mile of deliveries has become the Holy Grail for them because they have gotten into cold distribution of life sciences equipment and medicines,” he said. “They could be the very company responsible for distributing a treatment for the coronavirus when one is discovered.”
Donald Klepper-Smith, chief economist and director of research for New Haven-based DataCore Partners, said the pandemic and the economic downturn it has caused have created an environment “where every dollar matters.”
“Consumers have both a financial incentive as well as a health incentive to use e-commerce,” Klepper-Smith said. “This is part of a structural change in our underlying economy.”
In previous decades, the manufacturing sector was driven by the “just-in-time” methodology, he said. Just-in-time workflow is aimed at reducing the time it takes a product to go from being manufactured to being made available to suppliers and ultimately sold to consumers.
“The whole manufacturing sector has been predicated on that for a while and now that has spread to the retail sector,” Klepper-Smith said. “It’s literally products being provided on demand.”
Every job created in the distribution sector “will have a significant multiplier effect on Connecticut’s economy,” he said.
“I think there’s going to be tremendous sales and job growth in the distribution and e-commerce sector in the future,” Klepper Smith said. “But at the same time, we have to ask the question what impact this is going to have on bricks-and-mortar retailers; Connecticut has been over-retailed for a long time.”