Online retail giant Amazon is doing more than just deciding not to renew a lease in Virginia on one of its longest-serving distribution centers. It's providing a window into its real estate strategy to get online orders to customers faster.
The Seattle-based company plans to close the 80,749-square-foot distribution center in Sterling, Virginia, that it has leased from landlord Prologis for more than 15 years. That makes it one of Amazon's oldest logistics facilities in the United States, and one that lacks the higher ceilings, larger doors and robotics for automated package handling that the retailer now seeks.
As a result, the Sterling site has become expendable to a Virginia network that now includes 14 fulfillment and sortation centers and 16 delivery stations, including many newer facilities that are built to the firm's specifications, the company said.
“Over recent years, our operations footprint in the region has grown significantly," Amazon spokesperson Amber Plunkett said in an interview.
Amazon, the pioneer of same-day and next-day shipping through its Amazon Prime service, is the largest player in a crowded field of global companies looking to track and fine-tune their logistics real estate footprints. It's replacing some older properties with new sites, focusing on location and automation, and moving forward on expanding its same-day delivery facilities to more than 4,000 smaller cities, towns and rural communities by year’s end, according to Amazon executives.
Meanwhile, Amazon is upgrading and expanding its stock of same-day delivery warehouses to support same-day grocery deliveries to more customers, in an attempt to grab a larger share of the nearly $1 trillion spent annually by shoppers at physical grocery stores and other locations. That figure is supposed to grow 5% in the next two years, according to a CapitalOne research report.
Amazon shipped more than 9 billion orders for same-day or next-day delivery worldwide in 2024, up 29% from the 7 billion items shipped the previous year. The number of U.S. locations with same-day deliveries increased 60% last year over 2023.
Reevaluating its portfolio
Amazon started closing dozens of warehouses and canceling or delaying openings of new facilities from California to New Jersey in spring 2022 after a surge in leasing activity in the first years of the pandemic, when consumers stuck at home shopped online in higher volumes. As consumer demand started to moderate, some industrial tenants including Amazon had more space than they needed, prompting closings.
The company resumed its logistics expansion last year after shifting to a regional delivery network from a national fulfillment network in an effort to lower fuel costs and fill orders faster. Amazon said it plans to double its number of same-day delivery facilities over the next few years to get more items closer to customers.
When it comes to evaluating sites for closing, Amazon weighs such factors as a building’s age and efficiency against the strategic value of investing in newer, more modern facilities.
Before 2022, Amazon leased properties that were on average four to five years old at the time of occupancy, according to Juan Arias, CoStar's national director of U.S. industrial analytics. That average has now dropped to fewer than three years, "reinforcing national industrial trends of net occupancy gains concentrated in the newest properties."
Ceiling heights "have also increased substantially, from an average of 32 feet in 2016 to well over 36 feet in 2024 and year-to-date in 2025," Arias said.
It's not just a focus on newer buildings; Amazon is now giving more attention to being closer to consumers and tapping into underserved rural areas.
Amazon said in a statement that it “may close older sites, enhance existing facilities or open new sites” as the firm evaluates whether facilities fit current business needs and the requirements of employees, customers and partners.
From old to new, Amazon trades out US warehouses
That's where the warehouse in Sterling in Northern Virginia's Loudoun County comes into play.
While Prologis highlights the property's proximity to Route 28 and Route 606, the property is nearly two decades old, with ceiling heights that are lower than today's standard, according to CoStar. CBRE is marketing the one-story building in Prologis Dulles Gateway as being available by next February, according to CoStar data.
"As we evolve our operations, we're transitioning away from our Sterling fulfillment center, while continuing to grow our significant presence across northern Virginia,” Plunkett said.
Nearly 125 employees have already accepted transfers to other Amazon facilities — including some employees who participated in the firm’s work-based learning program to gain skills and qualify for jobs at the firm’s data centers in Northern Virginia, home of the nation's highest concentration of such facilities.
Like the office segment, industrial tenants are prioritizing nicer spaces when making lease decisions. After nearly three years of rising U.S. industrial vacancies, according to CoStar data, tenants are gaining leverage in lease negotiations, and they're using that leverage to sign deals for warehouses with new features that extend beyond ceiling heights.
Amazon is also building out its own new spaces in order to ensure the warehouses fit company needs, as it closes other older warehouses across the country.
The company last year announced it would close a fulfillment center in North Reno, Nevada, which it had leased since 2015. The closing is a result of similar reasons to the Virginia site — because it was too old and the lease was expiring, the company said. The firm is building a new same-day delivery facility in the area that is expected to open next year. The old site was built for bulk shipments and long-haul logistics, Amazon said, and the new facility will be more efficient and closer to Reno's population centers.
In San Francisco, a pair of Amazon warehouses are headed for demolition, and Prologis plans on replacing the site with brand new logistics facilities. It is unclear if Amazon will lease the new space there, if and when the warehouses open.