As Big Tech launches aggressive layoff campaigns, the amount of office space available for subleasing is rising to all-time highs.
While other sectors sought to downsize their real estate footprint throughout the pandemic, the tech industry had notoriously led leasing activity (as well as outright purchasing properties). Now with a recession on the horizon, large-scale cost-cutting initiatives have been launched by some of the nation’s top digital companies, including Meta (formerly Facebook), Twitter, and Amazon. These initiatives include hiring freezes and layoffs, leaving these companies with too many floors of office space, and they want to offload big chunks of it.
Millions of square feet of office space are being lost by Meta, Lyft, Salesforce, and other digital firms in major tech hubs like Silicon Valley, New York City, Washington D.C., and Austin, as well as other cities. In the midst of a hiring freeze, Amazon ceased development on new office buildings in July and is now planning to release thousands of employees. Overall, reports show that businesses in the technology industry have put roughly 30 million square feet of office space on the market for subleasing, more than twice the 9.5 million square feet they were looking to rent in the fourth quarter of 2019.
Leaders and property owners in cities like New York City, Austin, and Washington, D.C. have long courted the IT industry as a way to diversify their labor markets and fuel real estate expansion. However, not only do the layoffs announced this year cast doubt on the sector’s standing as a growth leader, Big Tech’s downsizing stands to deal a big blow to the office market and many city economies.