Amazon's widespread offloading of real estate means another major cut to its Bay Area office portfolio, this time with plans to sell a four-building office complex the online retailer purchased at the height of its pandemic-era growth spurt.
The tech giant sold the property at the Metro Corporate Center in Milpitas, California, an office campus Amazon acquired for $123 million in late 2021, to developer Dermody Properties, George Condon, a partner at the firm, confirmed. The Reno, Nevada-based developer expects to close on the 29-acre property in April and to convert it into warehouse space.
“We’re always evaluating our network to make sure it fits our business needs,” an Amazon spokesperson said in a statement. “As part of this effort, we’ve made the decision to explore selling the Metro Corporate Center site. We’re happy to remain part of the local community and will continue to deliver for customers from our two delivery stations in Milpitas.”
The imminent disposition is the latest in Amazon's real estate wind-down following a record period of expansion for the company since the start of the pandemic. It included a hiring binge that increased its workforce by about 270,000 employees in the second half of 2021 alone.
Amazon's decision to shrink its national real estate footprint comes amid a reckoning among companies that scrambled to expand operations to keep up with pandemic-era growth. However, that growth quickly subsided as local economies began to reopen, workers returned to work and inflation and rising interest rates sent consumer confidence on a downward spiral.
Neither Amazon nor Dermody Properties provided pricing details for the campus. However, according to several brokers in the greater Silicon Valley area, the retailer could take a loss on the late-1990s office complex as high interest rates and a potential recession have spooked real estate investors across the country.
The deal, once closed, would include the buildings at 909 Milpitas Blvd., 1001 and 1051 S. Milpitas Blvd., and 1000 Gibraltar Drive.
The company has listed multiple properties across the country for sale or sublease in an effort to pull back on rising expenses. Amazon has also started its largest-ever round of job cuts that will ultimately impact an estimated 18,000 workers around the world.
The Milpitas property was expected to eventually convert into a distribution or fulfillment center. The Bay Area complex is now part of a growing pool of stalled or canceled Amazon developments across the United States, including a large warehouse project in San Francisco and a 193-acre site on the outskirts of Austin, Texas.