Amazon in talks to double office space to 7 mn sq ft

The company may lease around 3.7 mn sq ft across Bengaluru, Hyderabad, Pune and Chennai

The Indian unit of Seattle-based online retail major Amazon is looking to more than double the space for its operations across the country, it is learnt. In an e-commerce market that is in the midst of consolidation, the Jeff Bezos-led company is eyeing aggressive expansion, a source with direct knowledge of the development said. This is despite an overall focus on cost-cutting and road to profitability. 

The company is in various stages of discussion for leasing around 3.7 million sq ft across Bengaluru, Hyderabad, Pune and Chennai, the source said. This includes pre-commitment of anything between 600,000 sq ft and 1 million sq ft each in Bengaluru and Hyderabad. A campus in Hyderabad with a built-up area of 2.9 million sq ft is likely to be a part of the real estate portfolio that Amazon is actively exploring.

Currently, the company occupies around 3.6 million sq ft for all its business entities, excluding warehouses, another source said. If the negotiations mature, it could soon have more than 7 million sq ft spread across Indian cities, excluding the space devoted to warehouses.  

Amazon did not comment on the matter. While rival Flipkart was on a real estate expansion spree till about two years ago, the Bengaluru-based firm has slowed down on that front. In 2014, it had agreed to take up around 3 million sq ft space in Bengaluru in phases. Subsequently, it signed up with US-based private equity firm Blackstone and Bengaluru-based developer Embassy Group, for a 2 million sq ft office space. Sources in the property market indicated that it has now cut down on its new real estate requirements to about 900,000 sq ft from 2 million sq ft earlier. 

E-commerce companies had been on top in leasing office space till about 2015 but the sector has run out of steam in recent times, as many prominent names shut shop, merged or pivoted into smaller entities.

Amazon, though it’s yet to make money on India operations, continues to invest significantly in the market. Its India investments have crossed $2 billion, which is part of Amazon’s commitment till now to infuse $5 billion into the market. 

Its biggest competition, Flipkart, has also been on a fund-raising spree. In the biggest fund-raise so far in the Indian tech start-up space, Japan’s SoftBank Group invested $2.4 billion in Flipkart recently. 

This was part of an earlier funding round where the Sachin Bansal- and Binny Bansal-founded firm raised $1.4 billion from Chinese Internet giant Tencent Holdings, US online retailer eBay and software major Microsoft Corp. Flipkart says it now has $4 billion cash on its balance sheet.