Bezos makes third losing bet on real estate

Sep 15, 2022; Kansas City, Missouri, USA; Amazon executive chairman Jeff Bezos in attendance before the Kansas City Chiefs play against the Los Angeles Chargers at GEHA Field at Arrowhead Stadium. Mandatory Credit: Jay Biggerstaff-USA TODAY Sports Acquire Licensing Rights

WASHINGTON, Nov 3 (Reuters Breakingviews) – Warmer weather beckons Jeff Bezos. The founder of $1.4 trillion technology giant Amazon.com (AMZN.O) is moving back to his hometown of Miami from Seattle, citing the desire to be closer to his family and his rocket ship company Blue Origin. But rising sea levels threaten to leave the Florida town underwater within the next 30 years. It’s not the only questionable real estate decision Bezos has made in the past several years.

He announced in a Thursday Instagram post that he will move to Miami, leaving the Washington city where he founded Amazon in 1994. Bezos grew up in the south-Florida city in the early 1980s, and he will return to a two-mansion compound worth some $147 million, according to Bloomberg.

Miami-based real estate had a renaissance during the pandemic as people sought warmer climates where they could be outside. Billionaires including Ken Griffin and David Tepper moved south when lockdowns took hold. The state’s freewheeling approach to the Covid-19 disease helped, too. Housing prices surged 60% between the second quarter of 2020 and the second quarter this year, according to data from the U.S. Federal Housing Finance Agency. Bezos is buying at an all-time high.

But people buying in the area are doing so at their own risk. Rising sea levels will place nearly 60% of Miami-Dade county underwater by 2060, researchers at the University of Miami said last year. Homes on the coast of Bezos’ new neighborhood, Indian Creek, face a 73% chance of flooding by 2050, according to nonprofit organization Climate Central. That’ll be just around Bezos’ 90th birthday.

Still, the founder is no stranger to real estate bets that don’t always make financial sense. Amazon sent city mayors scrambling when the company said in September 2017 it was opening a second headquarters. After 14 months of speculation and courtship, the company landed on Arlington, Virginia. Yet it has delayed construction on the next stage of the $2.5 billion project. Interest rates have since climbed nearly a full percentage point, making it pricier. Plus the stickiness of remote work could also mean that, even after the project is finished, Amazon will have a harder time getting employees to their new desks.

Bezos’ otherworldly expansion plans have also had their hiccups. His space firm, Blue Origin, suffered a rocket failure during an unmanned mission in late 2022. The U.S. Federal Aviation Administration closed its probe of the malfunction in September, but said the company needs to take 21 corrective actions before its New Shepard rocket can be used again.

Until then, Bezos’ plans to conquer the cosmos are, like his Arlington headquarters, on hold. A waterfront home in Miami offers a sunnier place to wait, but it may not be long before that property’s value, too, looks to be underwater.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

CONTEXT NEWS

Amazon.com founder and former CEO Jeff Bezos said in a Nov. 2 Instagram post that he will move to Miami from Seattle, leaving the city where he started the retail giant in 1994. Bezos attributed the move to wanting to be closer to his parents, as well as to live closer to his space company Blue Origin’s operations out of Cape Canaveral.

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