Amazon Doubles Industrial Acquisitions With More Than $2B In Deals

Amazon doubled its spending on industrial properties in 2024 compared to the prior year, handing out more than $2B across at least 39 transactions. The company spent $920M on properties in 2023.

The purchases this year included a major expansion of its logistics network, but Amazon spent significantly more money acquiring land to fuel the demand for its Amazon Web Services cloud computing arm that's being driven by the explosion of artificial intelligence.

Amazon acquired at least 3,000 acres across 14 states in 2024, according to CoStar data. The purchases represent not just an expansion of the company’s data center capacity but a shift in strategy as consumer spending patterns change yet again. 

”It's ironic to say they're quick to pivot because they're a behemoth, but it's because they have liquidity, they have the cash, they have the assets,” said Ermengarde Jabir, director of research at Moody’s Analytics focused on commercial real estate. “They're able to say, ‘This is what we need right now.’”

In 2020 as the pandemic shuttered offices and non-essential retailers, Amazon rapidly expanded its distribution network to keep up with demand. But it was reversing course by the end of 2022, shedding excess space and walking away from leases as consumer trends and supply chain dynamics came into focus. 

By February 2023, Amazon had closed or delayed plans for 99 facilities, totaling 32M SF across 30 states, according to Marc Wulfraat, president and founder of MWPVL International.

Last November, the e-commerce giant was granted permission from local officials in Miami to delay the opening of its largest data center in South Florida. The delivery date was pushed out nearly a year to September 2024. 

Amazon declined to comment for this story, citing a policy against discussing its real estate strategy.

Its largest purchase this year was the $394M October acquisition of a 2.8M SF industrial property in Daytona Beach, Florida. 

The five-story robotics-driven fulfillment center is slated to open early this year. Amazon bought the property from Hillwood Investment Properties, a Dallas-based developer who built the state-of-the-art facility for Amazon after acquiring the property from NASCAR for $14M in 2021.

The deal tripled the previous record sale price for a commercial property in Volusia County, according to the Daytona Beach News-Journal.

The renewed push to expand its logistics operations is part of a strategy to enable more same-day deliveries by keeping more goods in more locations near more consumers, the Wall Street Journal reported in May.

“It allows us to offer both fast speeds and lower our cost to serve,” Udit Madan, vice president for worldwide operations at Amazon, told the WSJ. 

At least seven of Amazon's industrial or land purchases last year had a price tag at or above $100M, according to CoStar, including three Virginia sites and a property each in Florida, Arizona, California and Indiana. 

Amazon’s 2024 purchases, with the exception of the Daytona Beach property, were primarily focused on data center investments. The company is competing to keep Amazon Web Services the dominant player in the cloud computing market amid the rapid rise of artificial intelligence. 

“What really catapulted Amazon to a stratospheric level was the fact that they’ve been a cloud provider to major companies worldwide now for more than a decade,” Jabir said. “They've been in that business making billions for years before generative AI came along.”

Two out of every five land and industrial properties Amazon purchased in 2024 were in Virginia, specifically land around the data center hub of Manassas. The area in central Virginia is considered the data center capital of the world, and Amazon’s $640M in combined purchases there accounted for roughly 25% of its transaction volume for the year. 

Its largest deal in the region was the $218M acquisition of 91 acres off Dumfries Road in Manassas, according to CoStar, where local county supervisors approved a rezoning amendment in March to clear the way for a data center.

Amazon paid $57M for another 39 acres less than three miles west of the Dumfries Road property in September where it is expected to expand its data center footprint. In July, it paid $136M for three data centers that it already occupied in Sterling, Virginia.   

Amazon is targeting massive sites in the most in-demand data center corridors, but it could wait years before it starts construction, Jabir said. 

“They buy the land. If they need it now they'll use it, but they're fine to sit on it for a year to five years,” Jabir said. “That's a luxury that very few other companies on Earth have.”

Amazon’s data center business accounted for roughly 16% of the company’s total third-quarter revenue last year, and the rise of AI adds more demand for the cloud services where Amazon already dominates.

Developers are looking to cash in, promising to deliver cutting-edge properties on tight timelines. But they've struggled to keep up with demand for the massive computing power that is needed to power the artificial intelligence that does everything from generating meme images to researching cancer cures.

The sector is already running up against power grid constraints and by one estimate is projected to use more than 6% of U.S. energy by 2028. 

Chris Curtis, who joined the industrial giant Prologis in July to spearhead its data center development, told Bisnow that acquiring access to power was a central part of its strategy. The company, already a major holder of industrial land nationwide, rolled out the new vertical with 1.3 gigawatts of energy commitments from global utilities to help lure customers. 

Amazon is looking at using nuclear power to meet its energy needs, announcing in October that it was helping fund the research and development of small modular nuclear reactors that could power individual properties. 

The move is necessary for Amazon to reach its net-zero carbon goals, Amazon Web Services CEO Matt Garman said in a statement at the time. 

“One of the fastest ways to address climate change is by transitioning our society to carbon-free energy sources, and nuclear energy is both carbon-free and able to scale — which is why it’s an important area of investment for Amazon,” he said.