Tech giants are giving up office space in London and Europe
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Big tech corporations are ditching offices that form part of their European headquarters as a slowing economy brings the sector’s years of rapid expansion to a halt.
Google’s parent Alphabet, Facebook parent Meta and enterprise software giant Salesforce are among US tech giants trying to ditch rented office space in London and Dublin, according to people familiar with the plans.
The moves come as companies respond to the downturn in tech stocks by cutting costs, including by cutting jobs. The pullback is a new setback for landlords who are already facing their biggest challenge since the 2008 financial crisis. Office stocks are plummeting on both sides of the Atlantic on rising interest rates, increasingly gloomy economic prospects and increased working from home.
Meanwhile, demands from employees to work remotely during the coronavirus pandemic have turned some tech companies into casual landlords, now scrambling to sublet excess space in a challenging real estate market.
“Walk around one of them [Big Tech] Offices and there is a massive amount of space for non-fee functions that looks very spacious,” said Chris Lewis, office occupier consultant at real estate company DeVono Cresa. “The space requirement was taken up by a really ambitious view of headcount.”
According to three people familiar with the matter, Google plans to ditch at least one of its London offices – in Belgrave House, Victoria – next year.
Belgrave House is the former headquarters in London, but Google’s lease on several floors of the building was coming to an end, these people said.
Metas offices in Rathbone Square, central London © Robert Evans/Alamy
The move is part of a wider restructuring in which the company intends to move most of its staff to its £1billion office under construction in King’s Cross.
The shutdown was accelerated because one in 10 employed Google employees chose to work from home permanently, according to a person familiar with the operations.
Google is also considering 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 for a 310,000-square-foot office in Fitzrovia, central London, last year but is now trying to sublet the block without ever moving in, according to people familiar with the deal. The company is also looking to find new tenants for hundreds of thousands of square feet in Dublin, Ireland that it initially intended to occupy.
Chief Executive Mark Zuckerberg said the company’s “real estate footprint” is being “shrunk” to cut costs, with hybrid workers being asked to share desks.
Such moves mirror efforts in the US, where the company is trying to find tenants for its Fremont, California building. It’s also halted an expansion plan in Austin, Texas, subletting instead. Meta has also terminated the leases on two of its three offices in Manhattan, New York.
“Recent years have brought new possibilities around the role of the office,” Meta said.
Salesforce, which owns workplace messaging platform Slack, confirmed it will sublet part of a floor in its City of London tower.
Amazon Web Services and Microsoft wanted to expand in London ahead of the pandemic but have put plans on hold, according to an office landlord in the capital. Amazon and Microsoft did not immediately respond to requests for comment.
It’s not clear what approach Twitter will take under new owner Elon Musk, who has laid off almost half the social media company’s employees but has urged the remaining employees to return to offices. Twitter’s real estate vice president was among those who resigned last month.
But some tech companies, which have called for employees to return to offices, are looking to expand.
Snap, which owns Snapchat, closed its San Francisco office in October after laying off 20 percent of its employees in August. However, Snap plans to reopen the office and wants to expand it, according to a person with knowledge of the moves. The company has urged employees to return to the office at least four days a week
TikTok has enforced a similar work policy, requiring employees to be in the office 2 to 3 days a week since September.
The fast-growing company, owned by Chinese company ByteDance, is about to finalize a deal to occupy the entire Verdant, a new building near its London headquarters in Farringdon, according to three people familiar with the plans. It is also expanding its Dublin office space. TikTok declined to comment.
