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Amazon's PillPack Acquisition Has Huge Implications For Industrial Real Estate


Amazon is already among the most influential companies in the real estate world, and it is poised to grow that influence even further.

The e-commerce giant agreed to acquire online pharmacy company PillPack in June, and when the sale closes it will gain access to pharmacy licenses in 50 states. But PillPack's only distribution facility is in Manchester, New Hampshire, and that model does not fit with Amazon's be-everywhere-at-once strategy.

If Amazon wants to enter the pharmacy industry in the same way it did for retail, it will need multiple distribution hubs near major cities, and it won't be able to easily retrofit existing warehouses for that purpose, CEO Santo Leo told CoStar.

Prescription medication distribution centers require multiple additional levels of security and safety as determined by state and federal regulatory agencies due to the protected status of medication. Temperature control and the ability to process recalls are also requirements, though specifics vary from state to state.

Amazon's vast network of distribution centers is largely designed to maximize efficiency, and as such has little room for wholesale change. That means they will likely be on the hunt for build-to-suit opportunities in the near future, according to Leo.

Amazon's interest in pharmaceuticals and healthcare could also have effects on the retail industry. Its healthcare joint venture with Berkshire Hathaway and JPMorgan Chase, combined with its prescriptive abilities, could give rise to Amazon-branded clinics. With its acquisition of Whole Foods, Amazon will soon have the ability to add pharmacies to those stores in similar fashion to many supermarkets across the country.