Pullback marks a sharp reversal after years when companies had been bolstering their office footprints
3 min
Big technology companies are cutting back on office space across major coastal cities, leaving some exposed landlords with empty buildings and steep losses.
The pullback marks a sharp reversal after years when companies such as Amazon.com , Meta Platforms ’ Facebook and Google parent Alphabet had been bolstering their office footprints by adding millions of square feet of space.
Their expansion continued even after the pandemic erupted and many employees started working remotely. Tech companies have been the dominant tenant in West Coast cities like Seattle and San Francisco, and by 2021 these companies came to rival those in the finance industry as Manhattan’s biggest user of office space .
Now, big tech companies are letting leases expire or looking to unload some offices. Amazon is ditching or not renewing some office leases and last year paused construction on its second headquarters in northern Virginia. Google has listed office space in Silicon Valley for sublease, according to data company CoStar . Meta has also dumped some office space and is leasing less than it did early on in the pandemic.
Salesforce , the cloud-based software company, said in a recent securities filing that it leased or owned about 900,000 square feet of San Francisco office space as of January. That is barely half the 1.6 million of office space it reported having in that city a year earlier.
Tech giants looking to unload part of their workplace face a lot of competition. Office space listed for sublease in 30 cities with a lot of technology tenants has risen to the highest levels in at least a decade, according to brokerage CBRE . The 168.4 million square feet of office space for sublease in the first quarter was down slightly from the fourth-quarter 2023 peak but up almost threefold from early 2019.
Even tech companies that are renewing or adding space want less than they did before. The amount of new office space tech companies leased fell by almost half in the fourth quarter of last year compared with 2019, CBRE said.
Tech’s voracious appetite for office and other commercial real estate had been an economic boon for cities. The new workspace usually brought an influx of well-paid employees, boosted cities’ property-tax revenue and translated into more business for local retailers and shop owners.
Now, the waning appetite is a blow to cities at a time when it is difficult to find other big tenants. For landlords already grappling with higher interest rates and a drop in demand from financial companies, law firms and other tenants, tech’s reversal is especially painful.
In some cases, tech’s softening demand can lead to plunging real-estate values. Take 1800 Ninth Avenue, a 15-story office building in Seattle. Amazon’s rent payments helped almost triple the building’s value in the decade after the 2008-09 financial crisis.
In 2013, Amazon moved into about two-thirds of the building. At the end of that year, the building sold for $150 million—almost double the $77 million it had sold for just two years earlier.
Its price kept climbing as strong demand from tech companies and low interest rates drew big investment firms into the Seattle commercial-real-estate market. In 2019, J.P. Morgan Asset Management bought the building for $206 million.
Amazon’s lease expires this year, and the company is moving out. The building is listed for sale. It is expected to sell for about a quarter of its 2019 price, according to estimates by real-estate people familiar with the property.
“We’re constantly evaluating our real-estate portfolio based on the dynamic and diverse needs of Amazon’s businesses by looking at trends in how employees are using our offices,” an Amazon spokeswoman said in a statement.
When the pandemic upended the U.S. office market, large tech companies were initially a bright spot. They continued adding space, betting they would eventually need it as they hired more people and as employees gradually returned to the office.
“Big tech was pretty resilient,” said Brooks Hauf , a senior director at brokerage Avison Young.
That changed in 2022. Remote work continued to be popular, and some big tech companies laid off workers , meaning they needed less space than they had thought, said Colin Yasukochi , an executive director at CBRE’s Tech Insights Center.
Leasing by tech companies fell by about half between the third quarter of 2021 and the third quarter of 2022, according to CBRE.
Since then, companies tied to the booming artificial-intelligence business have leased more space in San Francisco and other cities. But that hasn’t been enough to meaningfully boost the office market. San Francisco’s office-vacancy rate hit a record 36.7% in the first quarter, according to CBRE, up from just 3.6% in early 2019.
Copyright 2020, Dow Jones & Company, Inc. All Rights Reserved Worldwide. LEARN MORE
BNW Developments has established a Sydney presence, joining Arada and Sobha Realty among the growing number of UAE developers pursuing Australian buyers and development opportunities.
The Australian leather house has opened an immersive four-day pop-up in Manhattan, unveiling its Bloom Collection and redefining what a product launch can look like.
A vibrant 1954 Palm Springs home featuring eight colorful murals by late artist Shawn Savage is on the market for $2.295 million. The 2,237-square-foot property features bold hot-pink doors, three bedrooms, a pool, mountain views and playful interiors blending modern glamour with classic Palm Springs style.
3 min
A bold 1950s home in Palm Springs, California, adorned with eight colorful murals by the late artist Shawn Savage, is coming to market ahead of the city’s annual Modernism Week.
The white stucco home on El Camino Way, built in 1954 and recently renovated, has an asking price of $2.295 million. Its staggered facade features three playfully abstract murals on either side of double-height hot pink doors.
MORE: Megamansion Outside Princeton, N.J., With a Pub and Two-Story Library Heads to Auction
The sellers are Los Angeles-based partners John Freeman and Mathieu Faure, who knew it was “the one” when they saw it after several months of searching in the winter of 2023. “It’s a happy house,” Freeman said. “We really liked the feel of the house: the uniqueness, the openness, the brightness—and the art.”
Located in the Mesa neighborhood of Palm Springs, which backs up to the San Jacinto Mountains, the 2,237-square-foot house features three bedrooms, an angled bonus room and a yard with a pool, desert mountain views and another colorful mural running alongside the pool.
“I never thought in my life I would have a house with pink doors,” said Faure, a producer at Apple TV who is originally from Paris. “It’s so colorful, it’s so different. And so Palm Springs.”
The layout of the home creates a smooth flow from the front doors through the open-plan common area—a foyer, bar, and living and dining room—into the kitchen around a fireplace wall and out to the yard. A corridor leads to a private bedroom wing, where the primary suite has floor-to-ceiling windows and the primary bath is only a tad smaller than the bedroom.
Faure has filled the home with Jonathan Adler furniture, rugs and accessories, riffing on the energetic California vibes of the house to create an aesthetic of “modern American glamour,” he said.
“It was enjoyable for me to play with different types of furniture and make this house ‘happy chic,’ as I describe it,” he said.
MORE: Beverly Hills Villa of Late Philanthropist Glorya Kaufman Sells for $19.25 Million
“He did a fantastic job,” said Freeman, who is an attorney and consultant. “It does kind of bring a smile to my face whenever I walk into the house.”
Since the furniture and decor were chosen for the particularities of the space, the couple is open to selling them with the home. Their West Hollywood house is already furnished; the collection doesn’t match the vibes of a Houston loft they bought near family; and Faure can’t imagine these pieces in New York—where he’s lived in the past—he said.
The duo bought the Palm Springs house for $1.925 million in 2024, according to property records, and will list the home Monday. They are represented by Stewart Smith, Patrick Jordan and Kevin Stanley of Bennion Deville Homes/Luxury Portfolio International.
The previous owners had purchased the home in 2021 for $975,000 and then spent more than two years and $700,000 on the renovation, according to Realtor.com. They commissioned Savage, a local Palm Springs artist and painter known for his joyful abstract work, to decorate the home.
MORE: Alpine Villa From Lady Gaga Movie ‘House of Gucci’ Lists for €2.9 Million
Savage, who died in 2024, lived in the Coachella Valley from 2003, and his work can be found in various local institutions and is on exhibit at the Illumine Gallery in Palm Springs. “Some artists pass through a place. Shawn Savage became a part of it,” the gallery’s description states.
Unsurprisingly, the murals invite lots of friendly conversations, as well as guided tours and interested lookers, but never to a degree that it disturbed the peacefulness of their home or the neighborhood, the sellers said. “It felt like living in an art gallery, and you have the exterior that you would share with the world,” Faure explained.
The neighborhood also played a role in their decision to buy, because of its access to the hiking trails of the San Jacinto Mountains, the lack of through-roads and the neighborly environment.
“It’s a very friendly place,” Faure said.
