Commercial real estate is increasingly ending up in the hands of publicly traded firms, which now boast more than $1.6 trillion in real estate holdings.
S&P Global Market Intelligence calculated the $1.6 trillion figure, the highest dollar volume of real estate ownership for that sector in at least a decade, and a 38 percent increase from ten years ago, according to the Wall Street Journal.
A few recent transactions highlight how publicly-traded companies — particularly tech firms — are leading the commercial real estate push. Last week, Google shattered a pandemic record, plunking down $2.1 billion to purchase its St. John’s Terminal office in Hudson Square.
Amazon is also making big purchases across the country. Right before the pandemic shut down the country, Amazon paid $1.1 billion to buy the Lord & Taylor Building from WeWork, working out to about $2,000 per square foot for the 660,000-square-foot building.
The e-commerce giant is also augmenting its rapidly expanding stock of industrial-sector leases by building its own facilities on land it has purchased.
Neither company tops the list of real estate value for publicly-traded companies, though, and it’s not even close. As of the most recent fiscal year, Walmart comes out on top with $116.9 billion worth of real estate, more than doubling Amazon’s second-place total of $57.3 billion. Alphabet — Google’s parent company — ranks third at $49.7 billion, followed by Microsoft and AT&T.
Companies have been taking advantage of low interest rates and the falling cost of office properties in major cities brought on by the pandemic. These firms are also looking to invest some of their massive piles of cash in hand.
Publicly-traded companies are holding $2.7 trillion in cash, cash equivalents and short-term investments, S&P Global reports — an increase of more than 90 percent from the fourth quarter in 2011. Alphabet leads its peers in the category, with holdings of $135.9 billion at the end of last quarter.
[WSJ] — Holden Walter-Warner