Amazon agreed to one of the San Francisco Bay Area's largest industrial property deals of the decade in a sign of the e-commerce giant's willingness to invest in strategic growth after downshifting investments in its real estate expansion.

The Seattle-based retailer and cloud computing business signed a deal to take over the entirety of a 1.23 million-square-foot warehouse at the Midway Commerce Center in Vacaville, California, an Amazon spokesperson confirmed to CoStar News. The building, now under construction, is the largest among three industrial properties being developed at the North Bay industrial park that will ultimately span more than 1.5 million square feet.

The lease is not only the largest ever signed for the greater Vacaville market, according to CoStar data, but it is also among the largest industrial deals to close for the entire Bay Area over the past decade.

The deal with landlord Ridgeline Property Group for the building at 920 Eubanks Drive was signed earlier this month. Amazon declined to provide details about its plans for the space, but according to CoStar data, the company is expected to move in before the end of the year.

"Plans are in the very early stages, and we'll share more details in the future," the spokesperson said.

After a pandemic-fueled streak of sprawling logistics leases — many of which Amazon signed — tenants across the United States have pulled back on expanding their industrial portfolios as they adjust to slowing sales, a shift back to normalized supply chains, and mounting economic concerns.

For the companies that are still hunting for space, average deal sizes have shrunk considerably, with the number of leases that surpass more than half a million square feet becoming increasingly rare over the past year.

Amazon rapidly expanded its industrial real estate portfolio since the start of the pandemic and went on a hiring binge that increased its workforce, adding about 270,000 employees in the second half of 2021 alone. By the end of last year, the company was leasing more than 370 million square feet of industrial space, according to CoStar data, roughly double the amount it was committed to in 2019.

In 2021, Amazon signed 17 industrial deals across the United States that each spanned more than 1 million square feet, according to CoStar data. Between now and the start of the year, Amazon has signed only five.

The Vacaville deal to expand its greater Bay Area footprint comes as Amazon has said it would drastically slow its previously unmitigated growth. The company last year released plans to terminate or delay the opening of about 50 delivery centers across the country, a move that collectively pulled the plug on more than 50 million square feet of industrial space, according to Montreal-based supply chain and logistics consultant MWPVL International.

Amazon's willingness to invest in strategically filling in its distribution network is a boon for Ridgeline, which broke ground on the speculative Midway Commerce Center with help from capital partner USAA Real Estate earlier this year.

The logistics park is a short drive from two other facilities Amazon operates in the Vacaville area, which has evolved into a desirable industrial hub with direct access to major ports, thoroughfares and affluent demographics. That desirability has helped push rents up about 22% over the past three years, according to CoStar data.