California: In the latest sign of change in the tech sector — and softness in the office market here — Facebook parent Meta and Microsoft are separately vacating office buildings in Seattle and Bellevue in Washington, according to the Seattle Times.
Facebook confirmed on Friday plans to sublease its offices at the six-story Arbor Block 333 in downtown Seattle, and in the 11-story Block 6 of the Spring District in Bellevue, the Seattle Times reported.
The Menlo Park, California-based social media giant said it is also reviewing leases for other Seattle-area office buildings. A soft market is a phase in the economic cycle characterized by more sellers than buyers and low prices.
The Seattle Times said on the same day, Redmond-based Microsoft confirmed reports that it won’t renew its lease at the 26-story City Center Plaza in Bellevue when that lease ends in June 2024.
The Seattle Times said the announcements come as the continued popularity of remote work and a tech slowdown with massive layoffs have both cut into demand for office space in Seattle and elsewhere.
Both Meta and Microsoft have embraced remote work while paring back their workforces as the tech sector swoons, according to the daily newspaper. In November, Meta announced layoffs of 726 Seattle-area workers.
Meta spokesperson Tracy Clayton told Seattle Times that the leasing decisions were primarily driven by the company’s move toward remote, or “distributed,” work. But he acknowledged that, “given the economic climate,” Meta was also “trying to be … financially prudent”.
Meta currently occupies all of Arbor Block 333 in Seattle and would have occupied all of Block 6, which is scheduled to open later this year. The company still has offices in 29 buildings, and nearly 8,000 workers, in the Seattle area, which remains the company’s second-largest engineering hub outside of its Menlo Park headquarters, Clayton said.
A Microsoft spokesperson characterised its decision about City Center Plaza as part of an ongoing evaluation of the firm’s “real estate portfolio to ensure we provide an exceptional place to work and create greater collaboration and community for our employees.” The City Center Plaza decision also comes amid a massive remodelling of Microsoft’s Redmond campus, part of which will be completed in late 2023. But the daily newspaper said Friday’s news adds to an already downbeat forecast for the Seattle-area office market as it struggles against economic headwinds and the sluggish return of remote office workers.
That struggle is most visible in downtown Seattle, where total office vacancy now stands at 25 per cent, according to a new report by commercial real estate agency Colliers.
The Seattle Times said even non-vacant offices are often half empty, owing to remote work. Since last summer, downtown Seattle has only around 40 per cent of the workers present before the pandemic, according to cellphone location data from Placer.ai posted by the Downtown Seattle Association.