Mr. Jassy and S-team gang... if you're reading this, then it's time to dump your COVID offices before your future rounds of layoffs. You're doing things in reverse!! Layoffs should be a last course reaction before other expense reduction options. You're skipping the most obvious reduction in plain sight - real estate!
In New York City, for example, not only have vacancies in high-end office space increased to 19% from 11.5% in early 2019, the availability of the highest of high-end space has risen slightly above that in lower-rated buildings. The most prestigious buildings cannot avoid the WFH environment.
In normal times pre-Covid only 70% of leased space was actually occupied. This has dropped now to 50% (per Kastle Systems metric). After peaking now, the Kastle score, relatively flat for at least 6 months, will likely trend downwards through the balance of this year.
Michael Silver, chairman of Vestian Global Workplace Services, said law firms he advises on their real estate often look to cut their space by around 30% when their leases expire. And unlike in 2021, more companies are worried about a recession and looking to cut costs. Defaults and vacancies are on the rise at high-end office buildings.
The halt in construction comes as yet another cost-cutting measure for Amazon, which consolidated its hardware and services teams last November and laid off over 18,000 workers in January. This past quarter, Amazon reported better net sales during the holidays, but still had one of its least profitable quarters in years. It earned $0.3 billion for the quarter, down from $14.3 billion at the same time in 2021, and posted its first net loss since 2014 at $2.7 billion.