The e-commerce giant Amazon Inc. (NASDAQ: AMZN) plans to save nearly $1.3 billion over the next few years by reducing the quantity of its office vacancies.
According to a Business Insider report sourced from an obtained internal document and input from an unnamed “person familiar with the matter,” Amazon will allow certain office leases to expire while negotiating for early lease terminations in other properties. It also plans to stop using some office floors.
The company now has a 33.8% office vacancy rate – which it attributed to slow growth and layoffs – and it is aiming to lower that to 25% this year and to 10% over the next three to five years. Amazon predicts this downsizing will result in annual operating expense savings of roughly $1.3 billion.
Brad Glasser, a spokesperson for Amazon, acknowledged the company was reviewing its real estate portfolio as a cost-savings strategy.
“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 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.”
Photo: Mike Mozart / Flickr Creative Commons
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