Amazon has been tending to buy when previously it would have leased, and the trend has massive implications for the industrial real estate market.
According to an article by Jon Banister and Jarred Schenke that is free to access with a long-in, Amazon is shifting its approach to its industrial spaces, with consequences for the broader real estate investment industry.
"Over the course of the last year, Amazon has gone from being indifferent on whether it leases or owns the millions of square feet that make up its industrial empire to preferring to buy and develop its own facilities," according to the article.
Where the massive online shopping and delivery company would previously lease industrial real estate from developers, the company si showing up to bid on sales. In addition to reports from experts inside the industry, the article also calls on the company's own financial reports to reach its conclusions.
The e-commerce giant has spent at least $450M over the past year to acquire industrial properties and development sites, Bisnow has found. Sources expect Amazon will continue to ramp up this buying activity, as the investments allow it to capture the value premium that it creates for an industrial property and for years has passed along to its landlords.
According to the article, Amazon's evolving industrial portfolio could have massive implications for an asset class that is already seeing huge price increases—16.9% year-over-year and 41% over the past three years.
"Amazon has contributed more than any other company to the growth in prominence and value of distribution facilities, leasing them up in huge numbers across the country to build out its supply chain for delivering goods to customers," writes Banister and Schenke.
As recently as last fall, Amazon Vice President of Real Estate and Global Facilities John Schoettler told The Wall Street Journal the company was "really agnostic" about whether it owned or leased real estate.
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