Amazon Sells Vacant Bay Area Office to Dermody Properties

Inno Flores, Tech Times 27 January 2023, 01:01 am

Amazon sold its vacant office complex located in the Bay Area. This was just purchased 16 months ago as a part of the company's supposed expansion during the pandemic and strategy to acquire real estate properties in big cities for future growth.

(Photo : Justin Sullivan/Getty Images)
RICHMOND, CALIFORNIA - NOVEMBER 23: Packages move on a conveyor belt at a new Amazon same day shipping facility on November 23, 2022 in Richmond, California. Amazon opened a 200,000 square foot same day shipping facility that can deliver some packages within hours of the order being received. The Facility is the second to open in Northern California and the first in the San Francisco Bay Area.

Selling Vacant Office

A vacant office complex was sold by Amazon to Dermody Properties LLC. According to a report from Bloomberg, the 29-acre office was located in Milpitas, California. The property was bought by Amazon last October 2021 for $123 million.

The original plan for this vacant office complex is for Amazon to have a location in big cities. Unfortunately, the property became vacant due to economic challenges that the company is facing nowadays. It was supposed to be used for a potential new warehouse and facility future growth.

However, Amazon is reportedly taking a loss on the sale of the Metro Corporate Center, but the final pricing for the property is still being discussed and negotiated for both parties. The deal will be closed by the end of April.

Dermody Properties is a commercial real estate developer in Reno, Nevada. Once the office complex has been bought, Company Partner George Condon stated that they will convert it into their own warehouse space. He added that the company is currently looking for warehouse tenants.

Amazon Spokesperson Steve Kelly stated that the company has always been evaluating its networks to make sure what the business needs, especially in these trying times.

He added, "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 in Bay Area

Given the economic situation, closing and selling a property that is not being used by the company is not surprising. The sold office in the Bay Area has been one of the affected markets for the last two years now.

Originally, the office was supposed to be a delivery facility. But since the company purchased this property 16 months ago, Amazon faced several challenges in maintaining this project, such as new regulations in the municipality and increasing building costs.

Mercury News reported that aside from the recently sold property, Amazon laid off 200 employees as they decided to chop 261 jobs in the Bay Area. This was included in the second round of the mass layoffs that the company revealed last October 2022.

Also Read: Amazon to Shut Down AmazonSmile Charity Program as Part of its Cost-Cutting Efforts

Real Estate Purchasing

Amazon has been buying several properties since 2020, including existing buildings and bare lands that were originally planned to be used for a new batch of fulfillment centers. Last year, the company was spotted quietly buying properties across the country.

However, this strategy did not last for long as Amazon pulled back on purchasing and pausing construction months after. This includes the 193-acre parcel outside Austin, Texas.

Meanwhile, Amazon shut down three warehouses in the United Kingdom, affecting 1,200 employees. BBC reported that the warehouses that were closed were in Hemel Hempstead, Doncaster, and Gourock in the west of Scotland.