In a recent development in the technology sector and a reflection of the soft office market, Facebook’s parent company Meta and Microsoft are both vacating office buildings in Seattle and Bellevue, Washington, as reported by the Seattle Times. On Friday, Facebook confirmed its plans to sublease its offices at Arbor Block 333 in downtown Seattle and Block 6 of the Spring District in Bellevue. The company is also reviewing leases for other office buildings in the Seattle area. A soft market refers to an economic phase characterized by more sellers than buyers and low prices.
On the same day, Microsoft, based in Redmond, confirmed that it will not renew its lease at City Center Plaza in Bellevue when it expires in June 2024. The announcements by both companies come in the midst of the growing popularity of remote work and a slowdown in the tech sector, resulting in layoffs and decreased demand for office spaces. Both Meta and Microsoft have embraced remote work and reduced their workforces as the tech sector faces challenges. In November, Meta announced the layoffs of 726 workers in the Seattle area.
According to Tracy Clayton, a spokesperson for Meta, the leasing decisions were primarily driven by the company’s shift towards remote or “distributed” work. However, he also acknowledged that given the current economic climate, Meta is taking financial prudence into consideration. Meta currently occupies the entire Arbor Block 333 in Seattle and had plans to occupy all of Block 6 in Bellevue, which is set to open later this year. Clayton stated that Meta still has offices in 29 buildings in the Seattle area, employing nearly 8,000 workers, making it the company’s second-largest engineering hub outside of its Menlo Park headquarters.
Microsoft described its decision regarding City Center Plaza as part of an ongoing evaluation of its real estate portfolio with the aim of providing an exceptional workplace environment that fosters collaboration and community for its employees.
The decision about City Center Plaza coincides with a major remodeling project of Microsoft’s Redmond campus, which is scheduled to be completed by late 2023. However, the announcement further dampens the outlook for the office market in the Seattle area, which is already facing economic headwinds and a sluggish return of remote office workers, as reported by the Seattle Times.
The impact of these challenges is most visible in downtown Seattle, where office vacancy currently stands at 25% according to a report by commercial real estate agency Colliers. Even non-vacant offices often remain half empty due to remote work. Since last summer, downtown Seattle has only seen around 40% of the pre-pandemic workforce present, based on cellphone location data from Placer.ai shared by the Downtown Seattle Association.