Mallika Dureja
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California: According to the Seattle Times, Microsoft and Facebook parent company Meta are both leaving office buildings in Seattle and Bellevue, Washington. This is the latest indication of how the IT industry is changing and how the local office market is softening.
According to the Seattle Times, Facebook confirmed intentions to sublet its offices at the six-story Arbor Block 333 in downtown Seattle and the eleven-story Block 6 of the Spring District in Bellevue on Friday.
The social media behemoth based in Menlo Park, California, claimed to be reviewing contracts for more office buildings close to Seattle. A period of the economic cycle known as a “soft market” is one in which there are more sellers than buyers and prices are low.
On the same day, Redmond-based Microsoft confirmed rumours that it wouldn’t extend its lease at the 26-story City Center Plaza in Bellevue when it expires in June 2024, according to the Seattle Times.
The Seattle Times said that the announcements came as the demand for office space in Seattle and elsewhere has been reduced by the continuous rise in popularity of remote work and a tech slowdown that has resulted in several layoffs.
According to the daily newspaper, Microsoft and Meta have both embraced remote work while reducing their workforces when the IT sector tanked. Meta announced the layoffs of 726 employees in the Seattle area in November.
According to Tracy Clayton, a representative for Meta, the company’s shift toward remote or “distributed” work was the main factor in the leasing selections, according to Seattle Times. However, he noted that Meta was also “trying to be… financially prudent” “given the economic context”.
In Seattle, Meta currently takes up the entire Arbor Block 333, and if Block 6 had opened later in the year, Meta would have done the same. The Seattle area continues to be the company’s second-largest technical base behind its Menlo Park headquarters, with offices in 29 buildings housing close to 8,000 employees.
Microsoft’s decision about City Center Plaza, according to a company spokeswoman, was made as part of an ongoing assessment of the company’s “real estate portfolio” to ensure that it offers its employees a top-notch workplace and fosters better community and cooperation.
As office rentals drop significantly in the city of San Francisco amid remote work and massive layoffs, #Meta (formerly Facebook) and #Microsoft are now vacating office buildings in Seattle and Bellevue in Washington State.https://t.co/xFmuFLtMlG
— Economic Times (@EconomicTimes) January 15, 2023
The decision about City Center Plaza is also made in the midst of a significant renovation of Microsoft’s Redmond headquarters, some of which will be finished in late 2023. The Seattle-area office market is expected to struggle against economic headwinds and the slow return of remote office workers, according to the daily newspaper, which added Friday’s news to an already pessimistic prognosis.
According to a recent survey by commercial real estate firm Colliers, that battle is most evident in downtown Seattle, where total office vacancy is currently at 25%.
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According to The Seattle Times, even occupied offices are sometimes just half full because of remote work. According to smartphone location data from Placer.ai shared by the Downtown Seattle Association, since last summer, only 40% of the workers present in downtown Seattle have been present.
