Amazon’s Big Real Estate Play

While it may be famous for online shopping, one of Amazon’s biggest plays is actually in real estate.

Don’t confuse this digital giant with online being a company in the cloud. Amazon is a major real estate mogul, and it is growing its physical footprint. What lessons can all investors take away from this?

Whole Foods

Amazon’s big acquisition of Whole Foods was more than just a play into the grocery market. Last year Reuters stated that REITs who were holding warehouses like those Amazon has used for distribution centers raised rents over 20% in just 3 months. National Real Estate Investor notes that the $14B Whole Foods acquisition gives Amazon 440 new stores and 11 regional distribution centers to use to process and ship other Amazon goods. Grant Cardone says he loves income properties new Whole Foods due to the ‘Whole Foods Effect’. This has proven to add as much as 4x the value to local residential properties according to US News.

Amazon the Real Estate Mogul

Amazon is the largest land owner in Seattle, WA. By 2022 it is estimated the retail giant could own 12 million square feet of space across 40 buildings. It has also invested in land for public parks, helps train locals for jobs, and has tested out various physical store concepts in Seattle.

Investors have been eager to snap up buildings which house Amazon as a tenant too. Last year two office building sales fetched $299M and $247M, and were bought by foreign investors. Another sold in early 2017 for $269M, or $925 per square foot, about double the price it sold for back in 2005.

More Coming

Amazon has ventured into just about every industry out there. However, more real estate plays, and its tablet, phone, and smart home device efforts could be setting it up for an even bigger stake in real estate in the future. Today so much real estate is traded online. It could make sense for Amazon to tackle in the future, once it nails its grocery business operations.

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund