Tech giants ditch office space in London and Europe | Popgen Tech
Big Tech groups are shedding offices that are part of their European headquarters as a cooling economy halts the sector’s years of rapid expansion.
Google parent Alphabet, Facebook parent Meta and enterprise software giant Salesforce are among the US tech groups looking to shed leased office space in London and Dublin, according to people familiar with the plans.
The moves come as the companies respond to the downturn in tech stocks with cost cuts, including by shedding jobs. The withdrawal is another setback for landlords who are already facing their biggest challenge since the 2008 financial crisis. Office values are tumbling on both sides of the Atlantic due to rising interest rates, an increasingly bleak economic outlook and increased homework.
Meanwhile, demands for staff to work remotely during the coronavirus pandemic have turned some tech companies into casual landlords now struggling to sublet surplus space in a tough real estate market.
“Walk around any of those [Big Tech] offices and there is a large amount of space given over to non-fee generating functions which seems very generous,” says Chris Lewis, who advises office occupiers at property company DeVono Cresa. “The amount of space that was taken was taken by a very ambitious view of staff.”
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 London headquarters, but Google’s lease on several floors in 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 staff to its £1 billion office in King’s Cross which is under construction.
The shutdown was accelerated because one in 10 employed Googlers chose to work from home permanently, according to a person familiar with the operations.
Google is also exploring subletting or abandoning more of its existing leased office space across London, according to people familiar with the company’s plans.
Google declined to comment.
Meta signed a lease on a 310,000 sq ft office in Fitzrovia in central London last year, but is now trying to sublet the block without ever moving in, according to people with knowledge of the deal. The company is also looking for 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 “shrunk” to cut costs, with hybrid workers asked to share desks.
Such moves mirror efforts in the US, where the company is trying to find tenants for its building in Fremont, California. It also put on hold a plan to expand in Austin, Texas, and is instead subleasing. Meta also terminated leases on two of its three offices in Manhattan, New York.
“The past few years have brought new possibilities around the role of the office,” Meta said.
Salesforce, which owns workplace messaging platform Slack, has confirmed it will sublet part of a floor in its tower in the City of London.
Amazon Web Services and Microsoft had planned to expand in London before the pandemic but put the plans on hold, according to one office leasing agent in the capital. Amazon and Microsoft did not immediately respond to requests for comment.
It is not clear what approach Twitter will take under new owner Elon Musk, who has laid off nearly half of the social media company’s employees but pushed the remaining staff to return to offices. Twitter’s vice president of real estate was among those who resigned last month.
However, some tech companies that have demanded staff return to offices are trying to expand.
Snap, which owns Snapchat, closed its San Francisco office in October after laying off 20 percent of staff in August. However, Snap plans to reopen the office and is looking to expand, according to a person with knowledge of the moves. The company told employees to return to the office for at least four days a week
TikTok has enforced a similar work policy, requiring staff to be in the office 2 to 3 days a week since September.
The fast-growing company, which is owned by China’s ByteDance, is close to completing a deal to occupy all of Verdant, a new building near 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.