Tech layoffs are the latest blow to office landlords
N.long In the past, big tech companies would splurge on flashy office spaces to attract talent. Money was flying around and a job boom was underway. Even when the pandemic forced programmers and software his engineers to work remotely, the tech giant splurged on lavish workplaces. Google is developing a sprawling complex in London with his 25-metre swimming pool and rooftop running his track, set to open in 2024, and another building in the city will house him $1 billion. throwing dollars Amazon said it will add a dog daycare facility and hiking trails to its new complex in Arlington, Virginia. In his two years to March, other tech companies in the United States and Canada have added enough office space to fill the Empire State Building more than 20 times his size.
With a recession looming and businesses tightening their belts, surplus office space is an easy target. This is especially true in the tech industry, which is laying off workers en masse. Tech companies around the world have said he has cut 150,000 jobs so far this year, according to job data website Layoffs.fyi. On December 13th, Amazon pushed back the start date of his new graduates, which he was supposed to start in May, to the end of 2023. Bad news for tech workers is bad news for tech landlords.
Meta (laying off 13% of its workforce) has abandoned plans to expand in New York. As well as Amazon, where he has paused construction of six new buildings in Tennessee and Washington. Snap, which laid off his one-fifth of its employees, has completely closed its San Francisco office. Twitter has reportedly stopped paying rent. Downsizers like Netflix, Lyft, and Salesforce are looking to sublet unwanted real estate. It all comes down to many empty desks. Since early 2020, office space available for subleasing in the top 30 US tech markets has more than doubled (see graph) to a record 142m sq ft (13m sqm).
This marks the end of a decade of office expansion. Since 2010, the tech company has acquired more space than any other industry, accounting for 17.5% of his leasing activity in America. By 2021, one-fifth of all leased office space will be occupied by technology companies. Big Tech signed more than a third of his largest lease by floor space last year.
And landlords have more to worry about than nervous tech enthusiasts pulling out. Along with that, the demand for all kinds of offices is increasing. Enrico Moretti of the University of California, Berkeley, in her 2012 analysis of 11 million American workers, found that for every new high-tech job in the city, a high-paying professional job would replace her two. People are created outside the industry. In cities where technical jobs are booming, other professional jobs are created at twice the rate of his national.
Technical problems in the real estate sector exacerbate the underlying malaise. Even as crowds gather in bustling restaurants, concerts and other public spaces, businesses are questioning whether office life will return to anything resembling pre-pandemic normal. Some argued that Work would permanently reduce a company’s asset needs. Others believed office life would eventually return, and although it’s been more than two years since he’s been working remotely, there’s evidence that he’s taking hold. Many office buildings in New York, San Francisco, and other cities remain ghostly silent. About one-fifth of the nation’s offices are empty.
Long-term leases have forced businesses to keep their offices even when they were emptied due to lockdowns. A record number of leases have expired, offering an opportunity to reduce unnecessary space. In 2022, 243m sq ft will be on the US market, representing more than one-tenth of the leased offices. jll,real-estate company. By 2025, he will have another 650 square meters (more than all office space in Manhattan) eligible for renewal. Unless the economy recovers spectacularly and businesses struggle to work from home, landlords will be stuck with too much room to be comfortable. ■
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https://www.economist.com/business/2022/12/15/tech-lay-offs-are-the-latest-blow-to-office-landlords Tech layoffs are the latest blow to office landlords
