Amazon.com Inc announced Friday that it will buy its Seattle corporate headquarters for over $1 billion from Microsoft Corp co-founder Paul Allen's investment firm, Vulcan Inc. This is highlighted to be the biggest commercial real estate deal for a single property this year.
In a SEC filing Amazon states it has entered into purchase and sale agreement to acquire 1.8 million square feet of corporate office for approximately $1.16 billion.
Amazon expects the deal to close in Q4, and has made non-refundable deposit to the tune of $23 million, which is likely to increase to $51 million and will be forfeited if the transaction is not closed in Q4.
The deal marks the United States' biggest single-asset commercial real estate transaction in 2012, according to Real Capital Analytics, which notes that Amazon is paying highest price for an office building over 100,000 square feet. This works to around $644 per square foot more than double the average rate of $308 per square foot, Real Capital Analytics told Reuters.
Apparently, the deal is favorable for Amazon which has been leasing properties thus far. In the low-interest environment, it helps the retail giant to wrest control over its headquarters, analysts told Reuters.
Besides, Amazon also plans to build offices in vicinity to house its growing associates, who at present total over 50,000.
Previously, in the beginning of 2012, Amazon revealed intentions to build over 3.3 million square feet of office space over the next eight years.
Reportedly, in a press release issued Friday, Vulcan has stated that it will use some of $1.16 billion funds to nurture other real estate investments, including re-development of remaining 30 acres of property it owns in South Lake Union, according to GeekWire.
At present, Vulcan is working on several residential and commercial projects including 375,000 square foot project that it is developing for Amazon.