Big Tech groups are abandoning offices that are part of their European headquarters as a cooling economy puts an end to the sector’s years of rapid expansion.
Alphabet, the parent company of Google, Meta, the parent company of Facebook, and enterprise software giant Salesforce are among US technology groups seeking to give up rented offices in London and Dublin, according to people familiar with the plans. .
The moves come as companies respond to slowing tech stocks with cost cuts, including cutting jobs. The setback is another setback for landlords already facing their biggest challenge since the 2008 financial crisis. Office values are falling on both sides of the Atlantic due to rising interest rates, the economic outlook for increasingly dark and the increase in working from home.
Meanwhile, staff requests to work remotely during the coronavirus pandemic have turned some tech companies into accidental landlords now scrambling to sublet excess space in a struggling property market.
“Walk through one of these [Big Tech] offices and there’s a huge amount of space devoted to non-cost functions that seem very generous,” said Chris Lewis, who advises office occupants at real estate company DeVono Cresa. “The space occupied has been taken up by a very ambitious workforce vision.”
Google plans to leave at least one of its London offices – in Belgrave House, Victoria – next year, according to three people familiar with the matter.
Belgrave House is its former headquarters in London, but Google’s lease on several floors of the building was coming to an end, these people said.
The move is part of a wider shake-up, with the company intending to move most of its staff to its £1bn King’s Cross office, which is under construction.
The shutdown was accelerated because one in 10 Google employees chose to work from home permanently, according to a person familiar with the operations.
Google is also considering subletting or giving up more of its existing rented offices in London, according to people familiar with the company’s plans.
Google declined to comment.
Meta last year signed a lease on a 310,000 square foot office in Fitzrovia, central London, but is now trying to sublet the block without ever having moved in, according to people familiar with the deal. The company is also seeking new tenants for hundreds of thousands of square feet in Dublin, Ireland, which it originally intended to occupy.
Chief executive Mark Zuckerberg said the company’s “real estate footprint” would be “reduced” to cut costs, with hybrid workers being asked to share office space.
Such moves reflect efforts in the United States, where the company is trying to find tenants for its building in Fremont, California. It has also put an expansion plan in Austin, Texas on hold, and is subletting instead. Meta has also terminated the leases of two of its three offices in Manhattan, New York.
“The last few years have brought new possibilities around the role of the office,” Meta said.
Salesforce, owner of workplace messaging platform Slack, has confirmed it will sublet part of a floor of its tower in the City of London.
Amazon Web Services and Microsoft intended to expand into London before the pandemic but have put plans on hold, according to an office leasing agent in the capital. Amazon and Microsoft did not immediately respond to requests for comment.
It’s unclear what approach Twitter will take under new owner Elon Musk, who has laid off nearly half of the social media company’s employees but has urged the remaining staff to return to its offices. Twitter’s vice president of real estate was among those to quit last month.
However, some tech companies that have demanded the return of staff to offices are looking to expand.
Snap, owner of Snapchat, closed its San Francisco office in October after laying off 20% of its staff in August. However, Snap plans to reopen the office and wants to expand, according to a person with knowledge of the moves. The company told employees to return to the office at least four days a week
TikTok has enforced a similar work policy, requiring staff to be in the office 2-3 days a week since September.
The fast-growing company, owned by China’s ByteDance, is set to strike a deal to occupy the entirety of Verdant, a new building close to its London headquarters in Farringdon, according to three people familiar with the plans. It is also increasing its office space in Dublin. TikTok declined to comment.