Not just digital: FAANGs also take a big bite out of real estate

FAANG is an acronym for this group of the largest of the major publicly traded technology companies comprising Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), formerly known as Google.

These companies dominate the digital world through streaming, cloud computing, social media, e-commerce, and more. But they are also major owners and tenants of physical real estate, including offices, data centers and distribution centers.

Reonomy, a commercial real estate analysis company (CRE) that claims a database of 50 million properties across the country, said in mid-October that Alphabet has the most properties with the highest total estimated value at $ 343 and $ 10.6 billion, respectively.

Amazon, meanwhile, has the highest total area at 24.2 million, a figure that is growing rapidly. By mid-2021, the company had doubled its warehouse and transportation network over the previous 18 months.

Image source: Getty Images.

Amazon opens installations by the hundreds

In 2021 alone, Amazon had opened more than 250 new facilities – from massive distribution and sorting centers to regional air hubs to delivery stations – by mid-September. And in April, Warehouse automation reported that nine of the top 10 projects under construction were either by or for Amazon.

Amazon not only owns these logistics properties, but also a major tenant for companies that include some of the largest real estate investment trusts, such as Prologis, helping to make the industrial segment one of the hottest in the real estate sector at the moment.

Amazon also has huge office campuses, especially in and around Seattle; the new HQ2 in Arlington, Virginia; and an ongoing operations center in Nashville, Tennessee.

With its forays into brick and mortar, it’s no surprise that Amazon also has the highest percentage of commercial properties in its CRE portfolio. Reonomy puts it at 6%, with the lion’s share occupied by the company’s 65 Whole Foods stores.

In contrast, Apple’s share is only 0.7%, according to Reonomy. The company has a substantial physical presence, sure, but it’s mostly low-profile spaces that the big tech company rents out instead of owning.

Putting huge piles of money at work

Amazon isn’t alone in using its huge pile of money to buy real estate. While it has bought 14 properties so far this year, according to Reonomy, Alphabet has actually bought 15, and Apple and Facebook follow at seven each.

Some of those purchases have been blockbusters. For example, Google announced in September that it would shell out $ 2.1 billion for a 1.3 million square foot waterfront office building in Manhattan, which The Wall Street Journal said it was the highest paid for a single office building during the ongoing pandemic that has hit office use so hard.

Reonomy pointed out that while Apple’s most visible real estate part is the 176-acre Apple Park – home to its futuristic corporate headquarters donut in Cupertino, Calif. – its biggest project right now could be in the Silicon Prairie of Iowa, where the company is about to build

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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About Mary Moser

Mary Moser

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