Amazon.com Inc. (AMZN), the world’s largest online retailer, agreed to buy its 11-building headquarters complex in Seattle for $1.16 billion in a deal poised to be the biggest U.S. office transaction of the year.
The campus has 1.8 million square feet (167,000 square meters) of space in the South Lake Union neighborhood, Amazon said today in a filing with the U.S. Securities and Exchange Commission. The company said it’s made a nonrefundable deposit of about $23 million, which will increase to $51 million on Oct. 22. It expects to complete the purchase in the fourth quarter.
The terms of the agreement would make the transaction 2012’s priciest purchase of a single office property anywhere in the country, said Dan Fasulo, managing director at real estate research firm Real Capital Analytics Inc. Seattle office buildings have been among the most desirable properties for investors this year, the firm’s data show.
Vulcan Inc., billionaire Paul Allen’s investment company, put the campus, which is now leased by Amazon, up for sale in August, saying it will use proceeds from the sale for other real estate projects in the area. South Lake Union is one of six areas Seattle designated as “urban centers” in the city’s 2004 growth plan.
“When we originally commenced the disposition process, we did not think Amazon would necessarily be the buyer,” said Ada Healey, vice president for real estate at Seattle-based Vulcan. The 11 buildings were built in six phases. “We were fully prepared to have the six phases go to six different buyers.”
Healey declined to comment on the deal’s capitalization rate, a measure of yield used by real estate investors, or the potential profit for Vulcan.
CBRE Group Inc. (CBG), the Los Angeles-based listing broker for the Amazon campus, declined to comment on today’s filing, said Robert McGrath, a New York-based spokesman for the real estate services firm. Drew Herdener, an Amazon spokesman, didn’t immediately respond to telephone calls seeking comment.
The Amazon campus is the largest of more than $3 billion of office deals under contract or on the market in Seattle, Kevin Shannon, vice chairman at CBRE, said before the agreement was announced.
“I’d estimate there will be over $4.5 billion closed by year-end, which would more than triple last year’s total,” he said in an e-mail. “Capital follows markets with the best fundamentals. Seattle has some of the best office market fundamentals in the nation.”
The announcement was made after the close of regular U.S. trading. Amazon fell 0.8 percent to $258.51 today. Its shares have climbed 49 percent this year as updated Kindle e-readers and tablets increase in popularity among consumers.