Desktop Space Meta, Amazon, Salesforce Ditch
After being overwhelmed with a flurry of pandemic hiring, Big Tech companies — Meta, Amazon, Salesforce, Lyft and others — are now associating layoffs with giving up office space.
Either they’re trying to get out of their leases or sublet, reports the Wall Street Journal.
Tech companies have 30 million square feet of office space available for sublease, more than triple the 9.5 million square feet they had in the fourth quarter of 2019, according to CBRE.
Offices have a vacancy rate of 12.5%, down from 9.6% in 2019 and the highest since 2011, according to CoStar Group Inc. In total, there are 212 million square feet of office space. rental on the market.
Unlike the sudden slump in the dot-com crash of 2001, this pullback is more significant, due to the extent to which Big Tech companies have gone on a relentless hiring spree in recent years, according to leaders.
Even in 2021, when companies were in a tug of war with employees working from home rather than returning to the office, tech companies were looking for prime space in high-end office towers, to attract talent to a tight labor market.
The repercussions could be significant on the financial system, since office buildings account for $1.2 trillion of the $5.4 trillion in total commercial real estate debt, according to data from Trepp Inc.
In fact, the tech giants have acquired a number of popular office buildings in recent years, including Amazon which bought the former Lord & Taylor department store in New York for $978 million and Facebook, a campus in Bellevue, Washington, for $368 million.
Real estate executives aren’t happy with the downsides of big cities like New York and San Francisco. They don’t hold their breath either.
As Colin Yasukochi, executive director of CBRE’s Tech Insights Center, puts it, “the layoffs are starting to pick up steam.”
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