Home » Business News » How Amazon has been quietly snapping up highly desirable development land

How Amazon has been quietly snapping up highly desirable development land

By Nagasunder in Business News, posted June 15, 2022

Amazon has been spending its billions on acquiring desirable development land around the US.

Jeff Bezos' giant has recently acquired 193 acres outside Round Rock in Texas.

This land was wanted by some of America's biggest developers as it can be used for almost anything due to the states relaxed land-use regulations.

But the land wasn't snapped up by the likes of Blastone or Prologis - who were both keen on buying the land.

In fact, it was Amazon who was the winning bidder, rather than one of the real estate giants.

The Seattle-based e-commerce giant began buying land and property in important US regions such as Southern California, Texas, Illinois, Florida, and the Bay Area.

It has increased the amount of constructed industrial space it owns in North America between 2020 and 2022.

Business documents seen by Bloomberg show it acquires empty buildings like old contact centers.

It also has bought around 4,000 acres over the two -year period, according to real estate researcher CoStar Group Inc. America.

What will Amazon do with the land?

Amazon intends to utilize much of the land for a new generation of tall fulfillment centers capable of storing a wide range of items close to customers in densely populated locations, according to corporation records, Inc. America.

Purchasing land is a significant move for Amazon, which has always depended on a small number of developers to source property, build relatively modest warehouses, and rent them back to the firm.

It's a hazardous strategy that exposes Amazon to the ups and downs of the industrial real estate market.

The corporation also overbuilt during the epidemic and now has an excess of warehouse space as the spike in internet purchasing has slowed.

As a result, Amazon is looking to sublease space it doesn’t need and has slowed its warehouse expansion.

Amazon spokesperson Kelly Nantel said: “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."

However, the corporation stated that its long-term real estate strategy has not changed.

Executives are dedicated to acquiring land in strategic places in order to realize founder Jeff Bezos' ambition of making an online purchase as satisfying as a trip to the shop.

If Amazon does not continue to get closer to consumers today, it may lose that advantage to retail competitors such as Walmart, which is only a short drive away.

John Blackledge, an analyst at Cowen and Company LLC said: “There’s going to be something on the other side of all of this investment for the consumer. People will buy more on Amazon when they see they can get it in five hours instead of in two days.”

Amazon has spent at least $2.2 billion in the last two years acquiring property or properties intended for rehabilitation.

The estimate is cautious since certain states, like Texas, do not reveal acquisition costs.

In March 2020, the company invested $30 million for 63 acres in a bustling industrial area between San Diego and the US border with Mexico.

Industrial land in the areas around major cities is becoming increasingly rare and sought after by a flurry of firms ranging from distribution corporations such as United Parcel Service Inc. and FedEx Corp. to supermarkets, restaurant chains, and car dealerships.

Looking for a new job? Find the WhatJobs Career Advice Center here

The vacancy rate for industrial space is at an all-time low of 3.4 percent despite a construction spree fueled by pandemic-related demand.

Source: Bloomberg

Follow us on YouTube, Twitter, LinkedIn, and Facebook