E-commerce giant Amazon is expanding its office space in North Texas in its latest confirmed office deal with WeWork — outside of Silicon Valley and New York City — in a move expected to bring hundreds of employees to an under-utilized campus in the Dallas area.
Amazon and WeWork confirmed the real estate lease to CoStar News with the companies verifying that WeWork has leased office space exclusively to house an Amazon office at 6535 N State Highway 161 in Irving, Texas, a suburb about 13 miles northwest of downtown Dallas. The building was put on the market for lease by McKesson, the nation's largest wholesale drug distributor, at the end of 2023. The drug maker ranks behind Amazon on Fortune's latest list of the 500 largest publicly traded U.S. companies with McKesson ranking No. 9 to Amazon's No. 2.
"We continuously evaluate our corporate office needs to best serve Amazon’s businesses, employees, and customers," the Amazon spokesperson told CoStar News.
The Dallas-area office lease marks the partnership's latest move on behalf of Amazon, in which WeWork leases space for the e-commerce giant in an arrangement offering Amazon the ability to quickly expand its real estate holdings and keep some flexibility to pivot for future changes. This strategy has already played out in New York City and Silicon Valley, with WeWork telling CoStar News that other major markets could follow that lead.
"We remain committed to partnering with Amazon to create dynamic, future-ready work environments and look forward to continuing to support its real estate strategy across key markets," a WeWork spokesperson told CoStar News in an email.
The new WeWork lease at the McKesson campus also coincides with Amazon recently telling its 350,000 full-time employees they need to work in-office five days a week. The move took effect on Jan. 2, however, Amazon had to postpone that date for some workers after realizing the company didn't have enough office space to house all of its workers on a full-time basis.
The return date for employees in cities, including Dallas, Houston and Austin, Texas; Nashville, Tennessee; Phoenix; Atlanta and New York, was pushed back by at least four months beyond Amazon's initial return-to-office deadline. Last August, Amazon recommitted to its office lease totaling more than 240,000 square feet of space in North Dallas.
According to CoStar data, an undisclosed tenant leased 154,278 square feet of space on three floors at the building in Irving owned by McKesson. The lease was done directly with the landlord, McKesson. McKesson did not immediately respond to a request for comment.
Amazon's partnership with WeWork has been a part of the firm's larger real estate strategy since before the onset of the pandemic.
Big companies like Amazon need a way to pivot with the help of a flexible office lease, with this lease being reminiscent of Verizon's short-term office lease within a VariSpace-owned and managed office building in Irving, said Steve Triolet, senior vice president of research and market forecasting for Houston-based Partners, who tracks the Texas office leasing market. Triolet is not involved with the lease.
Big spaces that are "the most successful of being backfilled are the ones that are plug-and-play that have furniture and everything is good to go for an employee," Triolet told CoStar News. "To build out shell space, it takes time."