Amazon.com Inc said on Friday it 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 property.<\/p>\n
The world’s largest Internet retailer plans to buy 11 buildings in the trendy South Lake Union area, comprising 1.8 million square feet of corporate office space, for $1.16 billion from Microsoft Corp co-founder Paul Allen’s investment firm.<\/p>\n
Based on the value of the deal, Amazon is paying the highest ever price for an office building over 100,000 square feet in Seattle at around $644 per square foot. That is more than double the average rate of $308 per square foot for the city’s office space, according to Real Capital Analytics.<\/p>\n
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, analysts said.<\/p>\n
Amazon expects to close the deal in the fourth quarter on the modern office buildings in South Lake Union, a former semi-industrial wasteland now known as a center for tech firms and fashionable restaurants.<\/p>\n
“It’s good to have control over your home office,” said RJ Hottovy, an equity analyst at Morningstar.<\/p>\n
At the end of August, Allen’s Vulcan Real Estate, part of his Vulcan Inc investment vehicle, put the buildings up for sale.<\/p>\n
The deal marks the United States’ biggest single-asset commercial real estate transaction of 2012, according to Real Capital Analytics, which tracks such sales.<\/p>\n
Allen, who co-founded Microsoft with school friend Bill Gates, has been the central figure in the revitalization of the South Lake Union neighborhood.<\/p>\n
Amazon already has plans to build new offices nearby to house its growing staff, which total more than 50,000.<\/p>\n
Earlier this year, the e-commerce company revealed plans to build more than 3.3 million square feet of office space over the next eight years.<\/p>\n
Vulcan said on Friday that it will use some of the $1.16 billion from Amazon to continue other real estate investments, including the re-development of the remaining 30 acres of property it owns in South Lake Union.<\/p>\n
Vulcan is working on several residential and commercial projects in the neighborhood, including a 375,000 square foot project that it is developing for Amazon.<\/p>\n
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