Christmas seems to have come early for Amazon this year. The latest HQ2 news shows the giant retailer’s ongoing passion for brick and mortar real estate and suggests commercial property is the best investment of the moment.
Amazon just struck a deal to get paid $2.5B to bring its new second headquarters to Queens, NY. It could get more in tax breaks in the years ahead. All on top of the huge grants and credits it is getting now. Virginia and Tennessee will also get new Amazon facilities. That’s in addition to the footprint the company has been growing in Canada, with Whole Foods stores, and five plus fulfillment centers in Ontario and British Columbia. Plus, Amazon plans to open 3,000 cashier-less Amazon Go convenience stores by the year 2021. This is all more good news for Canada and the US as Amazon latest moves make commercial retail real estate owners optimistic.
For those who are not directly benefiting from the growth in retail, the news may seem ironic to hear the expansion news of this supersized corporation, as they are shifting strong towards the brick and mortar format, at a time when many others are growing their ecommerce business. Yet, for Amazon who has a strong ecommerce business, diversifying their portfolio may prove to be the foundation they need to secure themselves during any future economic corrections or global recessions. This is good news for commercial retail investors who also seek security in their portfolio.
Many individual investors and institutions are looking for ways to protect themselves from the new slowdown in housing, stock market dip and expected dotcom crisis. Some stock indices have already lost all the gains they made throughout 2018. Condos in Toronto have begun to sell for under asking price, and other provinces as seeing more housing inventory on the market.
Aside from being a hard asset that doesn’t get wiped out by volatile stock trading, commercial real estate can actually perform even better during crisis times. This can be especially true of multifamily, mixed use and retail shopping plazas. The coming flood of capital looking for more of these investments could provide a further lift in the months ahead as well. Commercial property also gives companies and individual investors a lot of control over their own asset value and performance, which can prove critical in times when other parts of their portfolios are under performing
Amazon has been on a huge commercial real estate spree over the past few years, and they may only be accelerating that momentum now. As more investors and funds exit stocks and tech, and other types of real estate, we can expect to see demand for commercial property increase. ReDev Properties Group has proven to be a continued leader in the Canadian commercial property market, providing individuals and fund owners with well timed acquisitions and exits. Contact us to learn more about how we’re doing in the current market.