🔒Amazon’s growing CT distribution footprint set to top 4 million square feet

Many Connecticut towns and cities, including Hartford and East Hartford, in recent years were among hundreds of applicants that tried to lure e-commerce giant Amazon to build its second headquarters in the state.

But despite recruitment efforts from former Gov. Dannel P. Malloy and predecessor Gov. Ned Lamont, the state was not named on a short list of cities the internet retailer was considering for its $2.5 billion headquarters before northern Virginia was named the victor in the Amazon “HQ2” sweepstakes.

However, as Amazon continues its domination as the world’s largest retailer, the Seattle-based company has made major investments across the Northeast, including in Connecticut, where it launched several distribution sites this year.

An analysis of the e-commerce juggernaut’s presence in Connecticut shows that it currently occupies more than 3 million square feet in Windsor, North Haven, Cromwell, Stratford, Wallingford, Bristol, Enfield, Trumbull, Orange and at Bradley International Airport in Windsor Locks. It also plans to occupy another 1-plus million square feet at facilities in Windsor, Wallingford and Danbury in the next year.

Already employing thousands of workers in Connecticut, area real estate brokers say the company is eyeing additional locations in the eastern and western regions of the state as the coronavirus pandemic has accelerated the e-commerce boom.

Meanwhile, Amazon, which did not respond to requests for comment, is reportedly in talks with America’s largest mall owner to convert former or current J.C. Penney and Sears stores into distribution hubs to deliver packages.

Brokers say the deal could make sense for both Amazon and mall operator Simon Property Group as the e-commerce landscape shifts and many brick-and-mortar stores close their doors for good.

“I think to take over these malls is a great use of those buildings,” said Nicholas Morizio, Hartford president for property broker Colliers International. “That’s a great need.”

Amazon, recently announcing the debut of its new 403,000-square-foot, large-item fulfillment center in Cromwell, said it’s invested more than $2.1 billion in Connecticut over the last decade in real estate, cloud infrastructure and compensation for 8,500 full- and part-time employees. The company also estimated that its investments have contributed at least $600 million to the state’s economy during that period.

Brick-and-mortar retail impact

Connecticut has steadily become a major landing spot for several new Amazon fulfillment and delivery stations because it’s centrally located in New England and has significantly cheaper rent prices compared to the nearby New York and Boston markets, according to brokers and economic development officials.

Amazon recently said its growing presence helps speed up delivery times for both customers and the more than 17,500 independent authors and small- and medium-size businesses in Connecticut that sell on the company’s website.

But some have expressed concern that Amazon’s growing presence in the state, in addition to the continuing growth of online shopping, could stifle brick-and-mortar retail activity.

Others, however, believe those fears are misguided.

Timothy Phelan, president of the Connecticut Retail Merchants Association, said he welcomes Amazon’s growing presence in the state because it helps generate a significant amount of tax revenue and creates thousands of jobs with wages starting at $15 an hour.

In 2013, Phelan urged state lawmakers to force Amazon to begin collecting Connecticut’s 6.35% sales tax with the hope of generating approximately $15 million a year in additional sales taxes. It’s not exactly clear how much Amazon generates in Connecticut tax revenue annually, but the state collected about $250 million in online retail sales tax revenue in fiscal 2020, according to the Department of Revenue Services.

“We feel as long as the field is level, and everybody plays by the same set of rules, we just allow the market to dictate,” he said. “The fact that Amazon is growing in Connecticut just heightens the importance of every retailer having an e-commerce site themselves.”

Amazon’s store at Norwalk’s SoNo Collection mall and its pursuit of other vacant mall space nationally, Phelan said, is encouraging because it shows the company believes consumers still value an in-person shopping experience. He added that increased competition from Amazon will also pressure local retailers to innovate their sales strategies.

“I’m confident we have enough retailers in Connecticut that will give consumers enough choice to compete,” Phelan said. “Consumers have many choices, and that’s the kind of mix we want to see.”

Recent growth

Two of Amazon’s latest projects in Connecticut marked major milestones for the town’s of Cromwell and Windsor.

Jim Burke, Windsor’s economic development director, said Amazon will become the town’s largest employer with about 2,700 employees after it debuts its second $230-million fulfillment center on former tobacco farmland on Kennedy Road in the fourth quarter of 2021.

Amazon first broke into Connecticut in 2015 with the launch of its 1.2 million-square-foot fulfillment center on Old Iron Ore Road. Today, Burke said the site employs more than 1,700 full- and part-time workers.

The town’s largest employers, he said, include The Hartford Financial Services Group and Voya Financial, which currently employ about 2,000 and 1,500 workers, respectively.

In Cromwell, Amazon in recent weeks debuted what officials are calling the first large-scale development in the northern tier of the town.

Town officials had been hoping a major tenant would occupy the 120 County Line Dr. facility that Indiana developer Scannell Properties — which is also constructing Amazon’s new Windsor facility — had been marketing for more than a year before Amazon committed to the property this past winter.

The so-called “speculative’’ development is rarely seen these days in Greater Hartford’s commercial-industrial market since the 2008 financial crisis triggered the Great Recession.

Stuart Popper, Cromwell’s director of planning and development, said he believes the 36-acre Amazon operation could attract additional industrial developments to the area.

“Everyone was going, ‘this is either a brilliant move or a disaster,’ ” Popper said of Scannell building the facility without a tenant dedicated to the project. “It looks like a brilliant move now.”

This story has been updated