Tech and e-commerce giant Amazon is going on a cost-cutting initiative aimed at saving $1.3 billion by significantly reducing its office space and terminating leases ahead of schedule. The move underlines the company’s ongoing efforts to optimize its real estate portfolio and adapt to changing workplace dynamics.
According to a report by Business Insider, Amazon is grappling with a substantial amount of unused corporate space, prompting the need for a strategic overhaul. The company, known for its aggressive expansion, is now focused on addressing this inefficiency and streamlining its operations.
An anonymous source familiar with the matter and a leaked document revealed Amazon’s plan to downsize its office footprint. In response to the report, Amazon spokesperson Brad Glasser emphasized that the company is constantly evaluating its real estate needs based on employee usage patterns and collaboration requirements.
Glasser clarified that the adjustments in office space allocation are aimed at enhancing collaboration and optimizing workspace utilization. He dismissed speculations about the company’s stance on remote work, stating that any assumptions beyond real estate optimization are misleading.
Amazon currently faces a 33.8 percent office vacancy rate, according to the unnamed source cited by Business Insider. The company aims to reduce this inefficiency to 25 percent by the end of the year and further down to 10 percent between 2027 and 2029.
Glasser noted that the changes implemented by Amazon have already shown improvements in vacancy rates. He expressed confidence in further progress as the company continues to refine its real estate strategy.
While specifics regarding the locations to be downsized were not disclosed, Business Insider reported that Amazon plans to negotiate early terminations on some leases while allowing others to naturally expire without renewal.
This cost-saving initiative comes in the wake of Amazon’s recent workforce adjustments, including job cuts earlier this year and the elimination of approximately 27,000 positions between 2022 and 2023. The company’s decision to reduce office space aligns with broader trends observed among major corporations like Meta and Google, which have been scaling back both employee counts and office usage nationwide. We know that with new CEO Andy Jassy at the helm, Amazon has focused on cost-cutting more than adding new initiatives to the company.
