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February 26, 2016

In Auburn, a warehouse investor bets on FedEx as Amazon's big move looms

Puget Sound Business Journal

Marc Stiles

A real estate investment company called CenterPoint Properties has made a big bet in Auburn that won't damage FedEx and other traditional shippers too much if the e-commerce behemoth starts delivering packages on its own.

FedEx Ground rents an Auburn warehouse, which CenterPoint Properties of Oak Brook, Illinois, last week bought for $21.9 million, according to public records. It has been rumored that FedEx might move out of the 152,155-square-foot building at 3702 C St. N.E., but Todd Battison, a broker with commercial real estate company Kidder Mathews on Friday said that FedEx has extended its lease.

A press release from CenterPoint notes that the FedEx (NYSE: FDX) warehouse is six miles away from Amazon's mammoth new fulfillment center in Kent. That's a very good thing for a shipper today, but it might not be in the coming years because Amazon is working on a plan that would let it bypass traditional shippers, according to Bloomberg, which recently reported that Amazon is working on a program to displace major carriers.

Under the program, which is nicknamed "Dragon Boat," sellers on Amazon "will no longer book with DHL, UPS or FedEx, but will book directly with Amazon," states a 2013 Amazon (Nasdaq: AMZN) report, which Bloomberg cited. More about this is here.

This would be a huge shakeup for the shipping industry, given Amazon's growing sales. In the United States, Amazon's net revenue has more than doubled to $107 billion over the last five years.

CenterPoint has been snapping up properties in the Kent Valley, with the Auburn deal marking the company's ninth acquisition in the submarket since 2014. Two years ago, a CenterPoint official said the company hoped to grow its presence in Seattle by more than 1 million square feet a year. The region's total industrial market measures 308 million square feet.

A Seattle company, Shelby Co. LLC sold the Auburn building, according to public records, which also list Barbara Grashin and Jerome Anches as the LLC's members. Battison and two Kidder colleagues, Matt Wood and Andy Miller, represented Shelby and CenterPoint in negotiations.

For the full story, go to Puget Sound Business Journal.

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