Tech giants expand their commercial real estate holdings
With many people working from home due to the COVID-19 pandemic, commercial real estate is on the decline as companies shy away from buying more office space.
However, this does not apply to large tech companies, which emerged as prime tenants and buyers of offices, data centers, warehouses and retail stores during the pandemic.
“This is perhaps the best opportunity ever in the real estate industry,” Roy March, CEO of Eastdil Secured LLC, a real estate investment bank, told the Wall Street Journal. “I don’t think we’ve ever had such a demand that has been pushed out of any sector since the invention of the internal combustion engine.”
Numerous large tech companies, including Amazon, Facebook, Apple, Google’s parent company Alphabet Inc., and Microsoft Corp., have been pushed to expand their holdings by discounts in the commercial real estate market, the Journal said. Taken together, these companies currently occupy around 589 million square meters of US real estate, according to the CoStar Group.
These five companies added more than a quarter to their real estate holdings this year, the fastest rate in over a decade. The expansion comes at a time when most other industries have pulled out of real estate transactions as there are big question marks about how offices are being used after the pandemic.
But U.S. tech firms appear to be optimistic about the prospect of people returning to the office after the pandemic ends.
“We believe that after the pandemic we will eventually get back to doing much of our work in the office,” John Schoettler, vice president of global real estate and facilities at Amazon, told the Journal. “We believe that much of the best work we do is done in the office, where people can come together, work together to solve problems and work together.”