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.
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.
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.
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.
"It's good to have control over your home office," said RJ Hottovy, an equity analyst at Morningstar.
At the end of August, Allen's Vulcan Real Estate, part of his Vulcan Inc investment vehicle, put the buildings up for sale.
The deal marks the United States' biggest single-asset commercial real estate transaction of 2012, according to Real Capital Analytics, which tracks such sales.
Source: Reuters
