Amazon’s layoffs won’t hurt Atlanta’s largest landlord. But it is watching.
As an office landlord, seeing your largest tenant announce 14,000 layoffs is often a bad omen.
But the CEO of Atlanta-based Cousins Properties, whose largest office tenant nationwide is Amazon, told investors Friday he’s not concerned about the e-commerce giant’s plans.
Colin Connolly, CEO and president of Cousins, said Amazon is one of many companies that vastly increased its workforce amid the COVID-19 pandemic without increasing its office footprint. He said there’s actually opportunity for Amazon and its contemporaries to increase demand for office space even while laying off workers.
“Amazon, who grew their headcount over the last five years by 750,000 people, had not signed a significant amount of (office) leasing along the way,” Connolly said Friday during a third-quarter investor call. “That’s representative of what we’re seeing from a lot of different companies, so I do think that there’s some runway there.”
Cousins owns and operates the largest office portfolio in metro Atlanta, and it’s a major real estate investment trust across the Sunbelt. It ended September with an 88.3% occupancy level across its roughly 21 million-square-foot portfolio.
Amazon leases nearly 1.5 million square feet across five buildings owned by Cousins, including about 121,000 square feet in Buckhead’s Terminus complex. The other leases are in the Austin and Phoenix markets.
Amazon announced last week its corporate worker layoff plans, citing a need to reduce bureaucracy and the growth of artificial intelligence. It fits a recent wave of Fortune 500 layoffs, including UPS and General Motors.
Andy Jassy, president and CEO of Amazon, said Thursday on his company’s third-quarter call that the layoffs are not a sign that artificial intelligence will replace broad categories of white collar jobs. Instead, he said it’s part of a right sizing operation after rapid pandemic growth.
“The (layoff) announcement that we made a few days ago was not really financially driven and it’s not even really AI-driven, not right now, at least,” Jassy said. “It really — it’s culture.”
Jassy compared the recent cuts to the layoff practices of startups, which routinely cycle between quick growth and reorganization. But the trend, especially given the promise of AI to revolutionize the workplace, has commercial real estate experts on notice.
“There’s a lot of questions around AI and what that’s going to do for headcount at a lot of companies, particularly tech companies,” David Rubenstein, a Savills executive who oversees the real estate service firm’s Atlanta operations, told The Atlanta Journal-Constitution.
Connolly said layoffs, especially those targeting remote positions rather than in-person roles, likely won’t do much to depress office leasing momentum. Cousins completed 551,000 square feet of leases during the third quarter, its second-most over the last three years.
He added that companies requiring their workers to commute to the office most days of the week will continue to increase, offsetting labor disruptions.
“The return-to-office (movement) is a more powerful lever for office demand than corporate right sizing,” Connolly said. “And AI is not yet the existential threat that some expect it to be.”
About the Author
Zachary Hansen, a Georgia native, covers economic development and commercial real estate for the AJC. He's been with the newspaper since 2018 and enjoys diving into complex stories that affect people's lives.
