Tuesday, December 6, 2022 / by Juan Grimaldo
Technology cost cuts will continue to affect office real estate in key markets
Reports of technology companies laying off employees continue to roll in, as companies that a year ago couldn't hire enough workers are now tightening their belts.
Beyond job cuts, many tech companies are taking a hard look at their real estate to find savings, especially in the wake of the Covid-19 pandemic that enabled more widespread remote work. In fact, executives at Salesforce.com Inc. (NYSE: CRM) said in an earnings call last week the company would likely continue reducing its footprint. Last month, Meta Platforms Inc. (Nasdaq: META) executives said they planned to spend $2 billion to consolidate the company's office real estate, and put up for sublease space at an office building it planned to occupy in Austin, Texas.
That's quite a reversal from pre-pandemic days and even late 2020 and 2021, when tech users continued to take down big chunks of office space — although not at the clip the industry was gobbling space pre-pandemic. Some markets are seeing record levels of sublease inventory from real estate decisions led by, but not exclusively from, tech companies.
Leasing activity nationally by the tech industry remains 35% below pre-pandemic levels, according to CBRE Group Inc.'s (NYSE: CBRE) Tech 30 report from late October.
What the tech industry more broadly does with real estate is a key bellwether for the office market's long-term health because tech has been the biggest leaser of office space for several years now.
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By Ashley Fahey - Editor, The National Observer. Real Estate Edition