When Ecommerce Goes Brick and Mortar: Amazon is Using Whole Foods Acquisition
February 21, 2019
LAS VEGAS–(BUSINESS WIRE)–This is a commentary on real estate and the potential next move by
Amazon.
By Michael Shustek
Recent buzz about Jeff Bezos is that his jump from ecommerce to brick
and mortar with the Whole Foods acquisition may be the first step of
additional real estate-related deals.
There is no question that Amazon is a disruptive force for brick and
mortar retailers and owners of retail real estate. A force less
discussed is Amazon’s current and potential impact across the real
estate landscape.
Industrial
Outside of retail, the ecommerce giant’s most obvious impact has been on
the industrial real estate sector. Amazon’s success in ecommerce and
distribution, as well as the success of its peers, has driven strong
returns for industrial real estate investors. According to Bloomberg,
Amazon is the top occupier of industrial space in the U.S. with 102
million square feet in 258 facilities. Rising consumer expectations for
same day and next day delivery could also necessitate more localized
real estate demand. This “last mile” demand could drive additional
industrial leasing in smaller footprints in the future.
Retail
The last mile challenge has historically constrained the growth of the
online grocery business. Amazon’s acquisition of Whole Foods Markets in
2017 was an attempt to gain a broader footprint in more communities and
a sign of Amazon’s intention to disrupt grocery retail.
Amazon has also begun testing more brick and mortar retail locations
through several concepts. Book
stores, Amazon Go, and Amazon 4-star stores. The company’s
disruption of retail also has had an interesting effect as some malls
are shuttering with plans to develop more residential while other more
innovative retailers better meet consumer needs through an omnichannel
approach.
Residential
Online residential real estate brokerages are one of the fastest growing
startups according to a recent report by Fundera. Amazon could
help people buy and sell their homes with offerings including “For Sale
By Amazon” signs.
Healthcare
CNBC reports today that Amazon’s senior healthcare leader, Taha
Kass-Hunt, spoke recently at a conference where he indicated his team
has seen potential in developing artificial intelligence for “prediction
and natural language understanding.”
In December, Becker’s confirmed Amazon had hired renowned pharmacist
Jason Tzau to improve the company’s healthcare programs and service. CNBC
reported in May that Amazon had built a team in its Alexa division to
determine how the device may be useful in healthcare. With Amazon’s
second headquarters in Arlington, VA, don’t be surprised if new
healthcare and pharmacy initiatives are part of their blueprint.
While it is still too early to realize the full implications of Amazon’s
healthcare investments for healthcare real estate investors, Bezos is a
disruptor. His long term vision could include more industries such as
pharmacy and physician services.
As a technology giant, the future of healthcare could be the biggest
upside with Amazon’s next move. One thing is for sure, Bezos and his
teams are in the process of planning for the first half of 2024. With
the sheer size of Amazon, there are bound to be real estate winners and
losers.
Michael Shustek is an author, thought leader and real estate investor.
He is CEO of The Parking REIT and for more information, visit www.michaelshustek.com.
Contacts
Media contact:
Malkus Communications Group
Sandra Padilla,
954-523-4200
www.malkuscommunications.com