Browse Tag: amazon

Amazon’s Acquisition Of Whole Foods Has A Rival: Walmart

Photo of Whole Foods store

Is it time to put a halt on the recent wave of think pieces all across the web concerning the recent announcement that Amazon will acquire upscale grocer Whole Foods? Two research analysts at JPMorgan have identified a potential rival bidder: Walmart.

The potential bidding war comes with the stock price of the grocery chain edging higher than Amazon’s offer of $42 per share. The following CNBC video spells out the details that might arise with a competition for the 431-location, 91,000-employee grocery brand. Click below to view:

Becoming A Whole Foods Landlord

While the market (and regulators) decide the fate of Whole Foods deal, what does it take to become a landlord for a Whole Foods outlet?  As it turns out, the chain has thoughtfully provided a partial specifications list as well as a downloadable spreadsheet containing a Master Broker List, including contact information and territories for over 70 brokers across the US and Canada.  Also available: a list of Whole Foods stores currently under development.  Brokers and owners can propose a store site at this online form at WF’s site.

 

 

New Amazon Air Hub and the Cincinnati Warehouse Market

Amazon’s latest step in its apparent plan to take over its own supply chain is an announced $1.5B cargo hub outside of Cincinnati. The hub, slated to be placed in Cincinnati/Northern Kentucky Airport (CVG) is expected to enable the company to fly its Amazon Prime cargo jet fleet into and out of a healthy property market blessed with what Amazon’s SVP of Worldwide Operations Dave Clark called “a large, skilled workforce, centralized location with great connectivity to our nearby fulfillment locations and an excellent quality of living for employees.”

Construction of the facility is sure to have some follow-on effects as vendors and customers consider the Airport submarket’s nearly 31 million sf of inventory.  A recent arrival of new space allows plenty of options, boosting total vacant space to 1.4 million. Here’s a quick look at Queen City’s market as published this week in Xceligent’s 4Q2016 Cincinnati Industrial Market Report:

  • During 4Q 2016 the industrial market has absorbed just over 538,504 square feet (sf), with a year to date absorption of just over 5.2M sf.
  • As a result of just over 4.6 million sf of newly delivered space, industrial vacancy has risen from 3.7% in 2Q 2016 to 4.3%.
  • The Tri-County submarket has posted the highest positive net absorption for two consecutive quarters, closing 4Q 2016 with just over 676,000 sf. This positive movement was offset by the Airport submarket which posted a negative net total of 750,000 sf.
  • The weighted average asking rent has increased year over year from $3.56 per square foot (psf) to $3.96 psf. This increase can be attributed to an increased demand with limited warehouse availability.

Industrial Property Search: CVG Airport Cincinnati

Click here to take a look at live property data centered on CVG Airport/Covington at CommercialSearch.com.

Taking To The Skies

The location choice of CVG Airport by Amazon has the company striking while the iron is hot; the airport itself has been the beneficiary of ready warehouse inventory nearby. Its growth in freight handling has been in the double digits year-over-year for the last five years. If the extra freight loads Amazon represents seems a good fit for an airport with a record of expanding capacity in a sustained push, that may be part of the company’s interest in taking to the air: their designs for floating warehouses and plans for drone delivery are far more likely to arrive than it might at first seem. If there’s one thing Amazon does, it’s deliver.

Borders Ann Arbor HQ Books $10.5 Million Refinance

borders-hqNew York-based real estate investment banking firm Chesterfield Faring has announced a refinance of the Wickfield Center of Ann Arbor, MI, former corporate headquarters of the bankrupt and liquidated national bookseller chain Borders.

The refinance is in support of a bustling market in the former HQ’s space. The two-building complex, sporting a total of 330,000 square feet of rentable space, was sold to Hughes Properties earlier this year by Colliers International, who has been retained to list the available rental space.  The South Ann Arbor property has major tenants in Gold Star Mortgage, who is renting 68,000 sq. ft.  Colliers itself also rented 16,000 sq. ft to Prime Research, a strategic communication research firm.

The Prime Research lease appears to be part an parcel of a technology trend that some say felled Borders, a once mighty-bookseller.  In the Ann Arbor News, Brendan Cavender of Colliers International Ann Arbor who listed the building and represented PRIME in the deal said the new office’s footprint will cover about 85 percent of the second floor and Cavender said that another tenant is in final negotiations for the remaining office space.

“This is really a great development for the whole area,” Cavender said.

“The technology companies here are fueling growth in the retail and restaurant spaces as the new young employees move into the space. With Barracuda, Menlo, Google, and now Prime Research, you have a real density here of tech companies.”

Another Technology Vs. Traditional Retail Story?

The store closings of Borders in 2011 caused pain among fans of the bookstore business, a low-margin gentleman’s game that depends utterly on customer experience and a near-irrational expressions of customer loyalty.  The emotional investment of customers into Borders in its earliest days in Ann Arbor was the store-floor half of a love story that went all the way to the top management.  How did technology figure in its arc?

Technological innovation at Borders  – albeit of a decidedly pre-internet type – was strong.  Its inventory control system, developed in the 1970s and based on 3″ square cards was innovative and powerful enough to produce a spin-off business (Book Inventory Systems) that sold to independent bookstores around the world until 1994.

But it was a fateful decision about technology and internet retail in specific, some say, that sealed the fate of the global chain.

Most brick-and-mortar retailers had to make a decision in the very earliest part of the 21st century: was internet a distraction or was it a synergy?  Borders, like so many retail businesses faced a struggle with their own online presence, and in 2001 made the decision to outsource their online retail to Amazon.com.  That surrender to its most dangerous competitor was a disaster for Borders and a huge coup for Amazon. The highly personalized customer experience Amazon could deliver appealed to Borders customers far more than Borders expected.  The program would end in 2007 with Borders scrambling to reclaim their online heritage, but by then, industry observers say, it was too late.

 

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Amazon’s Landlord Puts Tech Giant’s HQ On The Market

Amazon HQ For Sale

Amazon’s HQ is on the market.  The 11-building campus in Settle South Lake Union area has no set asking price, but area comps suggest the property could move for about a billion dollars, once somebody adds it to their shopping cart and clicks “check out”.

In 2012, new Seattle office properties including 1918 Eighth, The Russell Investments Center, and 818 Stewart each have set the pace in the area by selling for between $525 and $558 per square foot. If the Amazon buildings go for $550 a square foot, the price of the 1.8 million sq. ft. campus adds up to $990 million. Marc Stiles’s piece in the Puget Sound Business Journal paints a picture of market factors coming together to prompt the landlord to take a closer look at their portfolio.  Specifically: historically low interest rates and very healthy valuations for leases to Fortune 500 companies.

The Amazon.com headquarters is 1.8 million square feet, with Amazon in 1.7 million square feet. Restaurants and retailers rent the rest of the space that Healey said is 93 percent occupied.

If the buildings sell for $550 a foot, the sale price would be $990 million.

Peter Shorett, executive vice president of Valuation Advisory Services for commercial real estate brokerage Kidder Mathews in Seattle, said he would not be surprised if the Amazon property sells for “north of $500 a foot.”

The price will depend on how long Amazon’s lease is, and what the rental rate is.

Healey said Amazon’s leases run for between 14 and 16 years. Amazon began moving in several years ago and will move in later this year to the final phase of the property, which is under construction.

[…]

Vulcan Real Estate, the real estate investment arm of Seattle-based Vulcan Inc., is selling for two reasons, [Vulcan VP] Healey said.

The first is to rebalance the company’s portfolio. This will reduce Vulcan’s exposure to having so much space leased to Amazon.

In addition, interest rates are at historic lows, and the value of top-tier assets leased to Fortune 500 companies with strong credit is high.

“We want to take advantage of the confluence of these events,” Healey said. “In other words, it’s a good time to sell.”

 

PHOTO CREDIT: Anthony Bolante, Puget Sound Business Journal