Amazon Plans to Save $1.3B By Cutting Leases Short and Shrinking Office Footprint
The tech giant has a 34 percent office vacancy rate
By Greg Cornfield March 27, 2024 5:05 pm
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Tech and e-commerce giant Amazon (AMZN) is hatching a plan to save $1.3 billion by significantly reducing its office space and ending leases early.
The company has been one of the major U.S. firms in cost-cutting mode the past couple of years, and it wants to address a major chunk of unused corporate space that it’s paying for.
Business Insider first reported the latest plan, citing an anonymous source familiar with the matter and a leaked document. In response, Amazon spokesperson Brad Glasser sent a statement to Commercial Observer explaining the company is constantly re-evaluating its real estate portfolio based on the firm’s needs by looking at trends in how employees are using office space.
“In some cases, employees may move buildings to increase collaboration and drive better utilization of our workspaces,” the statement read. “In other cases, we may take on additional space where we’re currently limited or make adjustments where we have excess capacity. To suggest that this is about anything else — such as our expectations for working in the office — is at best a misunderstanding and at worst intentionally misleading.”
The unidentified BI source said Amazon has a 33.8 percent office vacancy rate. The company expects its plan will ease that level of inefficiency to 25 percent this year and to 10 percent at some point between 2027 and 2029.
Glasser’s statement continued, “The changes we’ve already made are improving vacancy rates, and we expect to see further progress as we continue to learn and iterate on our portfolio.”
The BI report did not specify which locations would be downsized or cut. BI reported the company plans to negotiate early terminations on some leases and will have to let other leases naturally expire and not renew.
This comes after Amazon cut hundreds of jobs earlier this year, and approximately 27,000 employees in 2022 and 2023. Other major companies such as Meta and Google have similarly been reducing both employee counts and overall office use around the country.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
This article has been updated to include a statement from an Amazon spokesperson.
