Amazon (AMZN -2.37%) recently announced plans to create thousands of new corporate and tech jobs in Austin, Texas, and Phoenix, Arizona. Those new jobs add to the thousands of people it has hired in recent years across those two fast-growing Sun Belt cities, which have become tech hubs for the company.
One of the biggest beneficiaries of Amazon's Sun Belt expansion is Cousins Properties (CUZ 0.91%). The office-focused real estate investment trust (REIT) recently signed additional leases with Amazon to accommodate all those future hires. Those leases will provide additional support for the REIT's 3.2%-yielding dividend.
Image source: Getty Images.
Amazon's Austin expansion
Amazon plans to create an additional 2,000 corporate and tech jobs in Austin over the next few years, expanding its Austin Tech Hub. That's in addition to the 3,000 jobs it has already created in the city and the more than 1,000 jobs currently available.
To accommodate its growth in the city, Amazon has signed a 330,000-square-foot lease to occupy all the space of Domain 9, which Cousins is developing in Austin. The company started developing the office building earlier this year. It expects to invest about $147 million and finish it by mid-2023. Amazon will begin occupying the building in phases in 2024.
Amazon already occupies three locations at The Domain, a 2.1 million-square-foot office campus with a unique combination of outdoor space and amenities, including access to local retail, restaurants, and entertainment. In addition to Domain 9, Cousins has enough room to develop an additional 1.7 million square feet of space in the area. That gives it plenty of room to grow as Amazon and other companies expand and relocate to Austin.
Cousins also recently enhanced its Austin office portfolio. It sold 816 Congress, a 435,000-square-foot office building built in 1983 for $174 million. While it's currently 78% leased, upcoming expirations will take it down to 60% leased in early 2023. The company recycled that capital to buy out its partner's 50% interest in 300 Colorado for $162.5 million. They recently completed the 369,000-square-foot office building, which is 88% leased. The newly constructed trophy property is the type of office building companies want to lease these days.
Amazon adds more space in Phoenix
Amazon is also planning to create 550 new jobs at its Phoenix Tech Hub. That will add to the more than 5,000 people it has hired in the area in recent years.
The company also turned to Cousins to support these future hires. It signed a 63,000-square-foot expansion at its existing offices at 100 Mill, a project developed by Cousins Properties and Hines, which own 90% and 10% of the joint venture, respectively. That will bring Amazon to 158,000 square feet at 100 Mill, an office building Cousins and Hines expect to complete in the first half of 2022.
In addition to Amazon, LiveRamp (RAMP 0.12%) recently signed a 32,000-square-foot lease at 100 Mill. That will accommodate a new hub for the San Francisco-based tech company and mark its entry into the Phoenix market. LiveRamp plans to position several executive leaders in the office and hire 100 employees. With these leases, Cousins and Hines have pre-leased 80% of the space at 100 Mill and have a strong leasing pipeline for the remaining space.
These offices are in high demand
There's been a lot of talk about the death of the office over the past two years as more people get comfortable with working remotely. However, Amazon and other tech companies fully expect to utilize offices in the future. In particular, they're locking up space in newly constructed buildings that offer lots of amenities in cities where more people want to live because they're warmer and cheaper than coastal gateway cities.
That's benefiting Cousins Properties, which concentrates on owning relatively new, high-quality offices in the most desirable markets across the Sun Belt region. That's evident in its recent leases with Amazon. Those leases should support the company's ability to continue paying an attractive dividend in the coming years.
