Amazon India to Relocate Bengaluru Headquarters to Save Costs and Upgrade Facilities

Amazon India is set to shift its headquarters from the World Trade Centre (WTC) in Malleswaram, Bengaluru, to a new office near the Bengaluru airport. This relocation, aimed at cost optimization, will involve vacating 500,000 square feet of office space spread across 18 floors at WTC, owned by Brigade Enterprises Ltd. The move will commence in April 2025 and is expected to conclude by April 2026.

Cost Efficiency and New Office Details

The upcoming office will be situated on a property owned by the Sattva Group, just 15 minutes from the airport. The rent for this new location is reportedly less than one-third of the ₹250 per square foot Amazon currently pays at WTC.

The new campus is envisioned as a state-of-the-art workspace designed to enhance employee collaboration and workplace experience. While Amazon has yet to disclose specific design details, a spokesperson expressed enthusiasm, stating, "We are excited about relocating to a new, state-of-the-art campus designed to promote collaboration and provide an exceptional experience for our employees."

Real Estate Implications  

Amazon’s relocation decision has sparked interest in the commercial real estate market. With Amazon vacating its current premises, stakeholders are curious about the potential ripple effects on property values and corporate leasing trends.

Brigade Enterprises might struggle to find a new tenant for such a large office space at WTC, which could reduce the demand for nearby rental housing. On the flip side, the airport area could grow as a business hotspot, with major companies like Infosys, Boeing, and Foxconn already in the vicinity.

However, there are challenges. The new location is 20 kilometers away, and commuting through Bengaluru's heavy traffic could take over 80 minutes during peak hours. Additionally, the airport area does not yet have metro connectivity, though plans to improve infrastructure are in progress.

This shift by Amazon India signals significant changes for its employees, real estate developers, and the overall property market in Bengaluru.

Impact on Brigade Enterprises

Brigade Enterprises has clarified that Amazon has not yet terminated its lease agreement at the WTC. A representative noted that while Amazon could have chosen additional space in a development on Bellary Road, it continues to maintain its lease at the current location. The WTC is part of Brigade Gateway, a 40-acre integrated complex that includes a mall, hospital, school, hotel, and over 1,200 residential apartments, offering convenience for Amazon employees, many of whom live within the complex.

If Amazon vacates, Brigade Enterprises may face difficulties in securing a new tenant for such a large office space, which could also lead to a decline in demand for residential rentals in the vicinity of WTC.

Financial Performance and Restructuring

Logistics and Payments: Amazon Transportation Services reported a 7.6% revenue increase in FY24, reaching ₹4,889 crore, with losses decreasing by 6.9% to ₹80 crore.  

Wholesale Division: Revenue dipped slightly to ₹3,577 crore in FY24, but net losses dropped significantly by 44% to ₹342 crore due to enhanced operational efficiency and regulatory compliance.

These measures follow Amazon’s workforce downsizing in 2023, which included 500-1,000 job cuts in India and contributed to a global reduction of over 18,000 roles across divisions like Audible, Prime Video, and Twitch.  

The relocation of Amazon India’s headquarters marks another step in its strategy to balance cost management and market dominance, aligning with a global pivot towards high-growth areas such as cloud computing, advertising, and digital content. The move underscores Amazon’s commitment to agility in an increasingly competitive environment.

Outlook

Amazon India’s move from the WTC to a more cost-effective location near Bengaluru airport marks a strategic shift with implications for employees, real estate developers and Bengaluru's property market. While the transition aligns with the company’s focus on efficiency and modern workspaces, it also raises challenges for Brigade Enterprises and signals the emergence of the airport area as a new business hub.

Image source: The Statesman