Amazon To Dispose Of Bay Area Office Space At Loss, Strategically Open News Facilities

  • Amazon.Com, Inc AMZN prepared to sell a vacant Bay Area office complex purchased 16 months ago as the firm went on a subleasing spree to reduce excess space amid the pandemic recovery-driven sales slowdown and macro headwinds.
  • Dermody Properties LLC, a commercial real estate developer based in Reno, Nevada, will buy the property and convert it into warehouse space, Bloomberg reports.
  • Amazon, in October 2021, paid $123 million for the 29-acre property in Milpitas, California, to tap real estate near big cities for use as new warehouses and facilitate future growth.
  • Amazon will likely book a loss on the sale of the Metro Corporate Center.
  • The Bay Area’s office market has been hit hard over the past two years as companies shifted to remote work to cut costs. Nearly one-fifth of the office market is vacant.
  • In 2022, Amazon suspended the construction of new warehouses in Spain until 2024
  • Amazon abandoned many existing and planned facilities around the U.S. due to slow sales growth. 
  • Amazon decided not to open 42 facilities spread across 25 million square feet of usable space and delayed opening an additional 21 locations, making up about 28 million square feet. 
  • Amazon also planned to shut down delivery stations in Hanover and Essex, near Baltimore.
  • Amazon sought to sub-lease at least 10 million square feet of warehouse space.
  • In 2023, Amazon shared plans to close down three of its U.K. warehouses, likely to impact 1,200 employees.
  • Amazon continues to open new facilities, including warehouses in Omaha, Nebraska, and Sioux Falls, South Dakota but at a more measured pace than during the pandemic.
  • Recently, Amazon shared plans to slash over 18,000 jobs or 1% of total employees.
  • Price Action: AMZN shares traded lower by 0.27% at $98.95 premarket on the last check Friday.
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