Amazon in October 2021 paid $123 million for the 29-acre property in Milpitas, California, a part of a method to lock up actual property close to massive cities that might be used for brand spanking new warehouses and facilitate future development. Dermody Properties LLC, a business actual property developer primarily based in Reno, Nevada, is shopping for the property and can convert it into warehouse area, stated George Condon, a companion with the agency.

The deal is anticipated to shut by the top of April, and Dermody is in search of warehouse tenants, Condon stated.

Amazon is anticipated to take a loss on the sale of the Metro Corporate Center, based on one particular person conversant in the phrases of the deal, who spoke on situation of anonymity. Another particular person stated the ultimate worth remains to be being negotiated. Condon declined to reveal the sale worth.

The Bay Area’s workplace market has been hit arduous over the previous two years, as firms pivoted to distant work and gave up actual property to chop prices. Nearly one-fifth of the workplace market is vacant, based on a fourth-quarter report from CBRE Group Inc. Amazon was possible planning to exchange the workplace advanced with supply amenities, however such growth has been stalled throughout the area owing to new municipal rules and rising constructing prices.

“We’re always evaluating our network to make sure it fits our business needs,” Amazon spokesman Steve Kelly stated in a press release. “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.”

Amazon purchased this property exterior Austin, Texas, solely to pause growth. (Image credit score: Bloomberg)

Amazon’s resolution to promote the property underscores the dangers of a brand new actual property technique the corporate has embraced lately. Bloomberg News reported final yr that the corporate was quietly shopping for property throughout the US. The actual property included current buildings and naked land that the corporate deliberate to make use of for a brand new technology of achievement facilities that it could develop itself. Previously Amazon had relied on builders to seek out property and construct the amenities.

When on-line gross sales development started slowing final yr, Amazon began pulling again on its property technique, pausing growth of a 193-acre parcel exterior Austin, Texas. Now, with the Bay Area sale, the Seattle-based firm has begun offloading properties, suggesting executives anticipate sluggish development to endure.

Amazon continues to open new amenities — together with warehouses in Omaha, Nebraska, and Sioux Falls, South Dakota, earlier this month — however at a extra measured tempo than throughout the pandemic when it wanted all of the area it may discover.

Amazon last year began its biggest-ever round of job cuts that may finally have an effect on 18,000 employees across the globe. The world’s largest e-commerce firm, which is scheduled to report earnings on Feb. 2, warned traders that fourth-quarter gross sales development could be the slowest in its historical past.