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Even before shopping shifted quickly online in the early months of the pandemic, e-commerce was a big driver for construction of large warehouses in the North Bay. But this year saw both demand for more of the massive spaces in the region and a scaling back locally by one of the globe’s dominant e-tailers.
2017 and 2018 saw big commitments to North Bay spaces for e-commerce ventures. Scandinavian furniture and home goods retailer Ikea leased 646,000 square feet at American Canyon’s Napa Logistics Park.
Marin County-based home décor and furnishing retailer Serena & Lily leased half of NorthBay Logistics Center’s 840,000-square-foot former grocery distribution center in Vacaville, the region’s largest commercial building at that time, and 24Seven Enterprises took the other half for direct-to-consumer wine ventures. WineDirect started a 230,000-square-foot fulfillment center in American Canyon.
Amazon has committed to five North Bay facilities over the past five years, but only three have come to fruition. The Seattle-based e-tailer first planted its North Bay flag with a 321,000-square-foot Vacaville sortation center in 2017. In 2020, it signed on for three more local ventures, pre-leasing a 202,000-square-foot building at Napa Logistic Park for a delivery station, committing to lease the 250,000-square-foot Victory Station project south of the city of Sonoma, and pre-leasing a 617,000-square-foot warehouse at NorthBay Logistics Center.
And last year, Amazon also committed to leasing a 180,000-square-foot warehouse in planning at Airport Business Center near Sonoma County airport.
The two Vacaville sortation centers were built, and the Napa Valley delivery hub opened. But Amazon ran into permit issues and public opposition to the Victory Station project, starting in 2020. By in the first quarter of this year, Amazon backed out of the Victory Station and airport-area projects.
Then news reports started surfacing that Amazon across the country was delaying or cancelling other warehouse projects as well as exiting leased facilities. This came as other retailers were noting a slowdown in e-commerce growth.
Locally, a slowdown in direct-to-consumer sales was noted for United Kingdom-based club giant Naked Wines, whose U.S. operations are based in Napa. In the U.S., Naked Wines employs 162, with the majority based in Napa, according to Huffsmith. In October, the company announced 6% job cuts, or 30 positions, as part of belt-tightening to make up for misjudging growth. The cuts involved 16 positions in the country, with 12 in the Denver office and four in Napa.
“We bought too much wine in 2021 when we thought we would grow faster, and so the balance of our overstock problem today sits in casegoods that we have,” said Nick Devlin, CEO, on an investor webcast.
Jeff Quackenbush covers wine, construction and real estate. Before coming to the Business Journal in 1999, he wrote for Bay City News Service in San Francisco. Reach him at jquackenbush@busjrnl.com or 707-521-4256.
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