Amazon is downsizing its office footprint. Lookout Seattle.
Per an internal document (as reported by Business Insider), Amazon has big plans to downsize its office footprint.
---- Key takeaways from report ----
1. Targeted savings: $1.3 billion (i.e., $1.3 billion in lost rent)
2. Targeted utilization: Amazon's current utilization is 66.2% and it wants to get to 90%.
3. Targeted timeframe: Next 3-5 years
4. Sources of savings: Lease terminations, non-renewal of leases, and moth-balling space
5. Utilization headwinds: Slower growth and layoffs
6. Utilization tailwinds: Relatively aggressive RTO approach (3 days a week and forced relocation to hub cities)
---- Amazon's take ----
Nothing to see here.
"We're constantly evaluating our real-estate portfolio based on the dynamic and diverse needs of Amazon's businesses by looking at trends in how employees are using our offices," Glasser said in a statement.
"In some cases, employees may move buildings to increase collaboration and drive better utilization of our workspaces. In other cases, we may take on additional space where we're currently limited or make adjustments where we have excess capacity. 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."
---- Hub system ----
"Amazon is also trying to increase office density by mandating that employees relocate to central 'hubs,' as BI previously reported. Amazon has a number of different hubs and the hub locations can vary depending on the team. But moving more employees to the same locations theoretically means the company can use less office space in non-'hub' locations."
"Last year, Amazon started requiring most employees to be in the office at least three times a week, and forced some remote workers to relocate closer to their central 'hubs.' Those who refused to comply were told to take a 'voluntary resignation,' and managers were given leeway to terminate them if the noncompliance continued, as BI previously reported."
---- Anticipated effects ----
Where is this likely to hit the hardest? ...despite Seattle being the largest Amazon hub.
Seattle.
Amazon reportedly leases nearly 18 million square feet in the Seattle MSA, which is...
...more than all of the office space in the rest of its footprint.
...about 8% of Seattle’s office space.
...about 17% of Seattle's Class A office space.
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