There were also concerns that Amazon sometimes left money on the table in its dealings with developers. A real estate portfolio can be sold and leased back to help a company get through lean periods without giving up the use of the land. Retail competitors like Walmart own most of their US stores, giving them more control and assets that appreciate. He liked to invest in potentially transformative, long-term bets-cloud-computing, the Alexa voice-activated platform, building a movie studio.īezos’ aversion to buying property confounded some Amazon real estate executives, especially as the company matured and its needs shifted, according to people familiar with the matter, who requested anonymity to discuss an internal matter. Bezos, keen to run the business like a startup for as long as possible, always had other plans for the cash, the people said. The company was opening new logistics facilities at the rate of about one every 24 hours at the time, so few realized the transaction represented a departure from standard practice.Īmazon had historically preferred not to tie up money in real estate. Then it built a 130-foot (40-meter) tall, state-of-the-art facility that can process a large assortment of products for same-day shipping. In March 2020, the company shelled out $30 million for 63 acres in a bustling industrial area between San Diego and the US border with Mexico. “People will buy more on Amazon when they see they can get it in five hours instead of in two days.”Īmazon has spent at least $2.2 billion acquiring land or properties slated for redevelopment in the past two years, according to CoStar, which says the estimate is conservative because some states, including Texas, don’t disclose purchase prices. “There’s going to be something on the other side of all of this investment for the consumer,” said John Blackledge, an analyst at Cowen and Company LLC. If Amazon doesn’t keep marching closer to customers now, it could permanently surrender that proximity to retail competitors like Walmart Inc. Executives remain committed to securing land in the right locations to fulfill founder Jeff Bezos’ vision of making an online purchase as instantly gratifying as a trip to the store. “Like all companies, we’re adapting to the availability of real estate and location of our customer demand, and we’re also constantly evaluating our approach based on our financials,” spokesperson Kelly Nantel said in a statement.īut the company said there is no change in its long-term real estate strategy. As a result, Amazon is looking to sublease space it doesn’t need and has slowed its warehouse expansion. The company also overbuilt during the pandemic and is saddled with too much warehouse space now that the surge in online shopping has decelerated. It’s a potentially risky strategy that exposes Amazon to the vagaries of the industrial real estate market. Now Amazon is increasingly taking parts of the development process in-house, often bidding against long-time partners for the best space. Amazon plans to use much of the real estate for a new generation of towering fulfillment centers that can store a wide variety of products close to customers in populous areas, according to people familiar with the strategy.īuying land is a major shift for Amazon, which historically relied on a handful of developers to find property, build fairly simple warehouses and rent them back to the company. Sometimes Amazon buys existing buildings, such as defunct call centers, but it also purchases bare land, of which the company acquired about 4,000 acres in the same period, says real estate researcher CoStar Group Inc. Between 20, Amazon tripled the amount of built industrial space it owns in North America, according to company filings. Starting about three years ago, the Seattle-based colossus quietly began searching for property in key US markets such as Southern California, Texas, Illinois, Florida and the Bay Area. It was the world’s largest e-commerce company: Inc. But when the successful bidder emerged in October, it wasn’t a real estate firm. and Prologis Inc., an industrial landlord that rents out warehouses across the country. So when the prominent Robinson family put the property on the market last year, there was strong interest from a range of real estate players, including home builders, private equity giant Blackstone Inc. Located a few miles north of the booming city of Austin, the raw parcel could be used for virtually anything given the state’s lenient land-use laws. (Bloomberg) - The 193 acres just outside Round Rock, Texas, were coveted by some of the biggest developers in the US.
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