IBM leasing back eight of the 34 buildings
IBM (IBM) recently completed the sale of its Rochester campus to IRG (Industrial Realty Group), a nationwide real estate development and investment firm. Financial details of the transaction were not disclosed.
The IBM campus in Rochester, Minnesota, comprises 34 buildings with combined space of more than 3.1 million square feet. The campus sits on an ~500-acre parcel. IBM had owned the campus for more than 60 years.
While the ownership of the facility is now shifting to IRG, the company expects to maintain a presence at the campus. IBM is leasing back eight buildings at the campus to continue its operations there.
Unlocking funds for more strategic investments
Real estate transactions such as the one IBM executed with IRG for the Rochester campus allows the seller to unlock funds. These funds could be utilized to finance investments in areas where they see significant potential for growth and profits. For IBM, cloud computing is a bright spot given the ongoing global push toward digitization.
Stimulating growth in the cloud market
IBM is one of the world’s top cloud computing providers. According to estimates by Synergy Research, IBM’s share of the global cloud computing market declined 0.5% year-over-year in 4Q17.
Amazon (AMZN) is the world’s overall top cloud computing vendor, with more than a third of the global cloud market under its control. Microsoft (MSFT), Alibaba (BABA), and Alphabet’s (GOOGL) Google grew their cloud market shares faster than both IBM and Amazon in 4Q17.