The Amazon.com Inc will spend over $1 billion to buy its Seattle corporate headquarters in what will be the United States biggest commercial real estate deal so far this year for a single location. In a trendy South Lake Union area, the world’s largest Internet retailer plans to buy a complex of 11 buildings in the trendy South Lake Union Area, comprising 1.8 million square feet of office space, for $1.16 billion from Microsoft Corp co-founder Paul Allen’s investment firm. The Amazon is paying the highest ever price for an office building over 100,000 square feet in Seattle at around $644 per square foot based on the value of the deal. According to Real Capital Analytics, there is more than double the average rate of $308 per square foot for the city’s office space.
The analysts said that the Amazon has been leasing the properties and it may make more economic sense for it to buy the location in the current low-interest environment and gain more control over its HQ. In South Lake Union, Amazon expects to close the deal in the fourth quarter on the modern office building, a former semi-industrial wasteland now known as a center for tech firms and fashionable restaurants. RJ Hottovy an equity analyst at Morningstar said that it’s good to have control over your home office. Allen’s Vulcan Real Estate, part of his Vulcan Inc investment vehicle put the buildings up for sale.
According to Real Capital Analytics which tracks such sales said that the deal marks the United States’ biggest single-asset commercial real estate transaction of 2012. Allen, who co-founded Microsoft with the school friend Bill Gates has been the central figure in the revitalization of the South Lake Union neighborhood. The Amazon already has plans to build a new offices nearby to house to its growing staff which total more than 50,000.
The e-commerce company earlier this year revealed plans to build more than 3.3 million square feet of office space over the next eight years. Vulcan stated that it will use some of the $1.16 billion from the Amazon to continue other real estate investments such as the re-development of remaining 30 acres of property owns in South Lake Union.Vulcan is working on several residential and commercial projects in the neighborhood like 375,000 square project that it is developing for Amazon.
REFERENCES:
http://gadgets.ndtv.com/internet/news/amazon-buys-seattle-headquarters-for-116-billion-276788
