Amazon Pauses Development Plans in North Austin

Amazon delivery station. Image courtesy of Amazon

Amazon has paused development plans indefinitely for its distribution center in Round Rock, Texas, the Austin Business Journal first reported.

The $250 million project would have taken shape on a 193.3-acre portion of the Robinson Ranch, which also drew other tech companies, such as Apple, with its upcoming $1 billion campus totaling 3 million square feet on a portion of the 7,000-acre site.

Based on public records, the e-commerce giant purchased the site last November and submitted a Planned Unit Development (PUD) application to the city of Round Rock, which shows plans for a large-format warehouse and distribution center with building heights up to 120 feet.

Supply vs. demand

According to a recent earnings call, Amazon spent $61 billion in capital investment during the 12 months ending in March. Roughly 30 percent of that figure represented spending on fulfillment capacity, mainly fulfillment center warehouses.

“For the consumer business, as I said earlier, we currently have some excess capacity in the network that we need to grow into. So we’ve brought down our build expectations. I’d note again that many of the build decisions were made 18 to 24 months ago, so there are limitations on what we can adjust midyear. That said, we expect fulfillment dollars spent on capital projects to be lower in 2022 versus the prior year,” said Brian Olsavsky, CFO of Amazon, during the earnings call.

Meanwhile, other developers are drawn to the Austin suburb. In March, Link Logistics Real Estate submitted plans for Settlers Grove, a $38 million development in Round Rock. The four-building industrial park totaling 631,100 square feet has a 13-month development timeline.

In April, Sabey Data Centers announced plans for a two-building data center campus with a capacity of 72 megawatts in the northern suburb of Austin. The metro’s first hyperscale facility is expected to come online in early 2023.

Recently, Prologis introduced a new proprietary metric True Months of Supply (TMS), which attempts to measure more accurately the nationwide supply/demand dynamic of the logistics real estate sector. The latest TMS for the U.S. indicates that logistics users would run out of available space options in 16 months.