Currently, Twitter executives can move between the company’s 38 offices around the world, from San Francisco, Sydney and Seoul to New Delhi, London and Dublin.
But not for long. On July 27, the company sent a memo to employees saying it would close its San Francisco office, plans to open a new office in Oakland, California would be canceled, and seven offices were under scrutiny as part of cost-cutting measures. future. Five other offices around the world are likely to be downsized. The whole point is to prepare the company for the takeover of Elon Musk and reduce costs as much as possible.
Twitter is not the first company to reduce its office space. Rumors swirled in early June that Yahoo would be getting rid of its 650,000-square-foot San Jose campus, which won’t be completed until the end of 2021. Later that month, Yelp announced that it was moving towards full removal and closed 450,000 square feet of office space across the United States. A week later, Netflix followed suit, saying it plans to sublease about 180,000 square feet of California property as part of a wider corporate layoff. This echoes Salesforce, which sublet half of its namesake tower in San Francisco in mid-July.
Twitter is likely one of many companies making the same decision, said Daniel Ismail, senior analyst at market research firm Green Street. “Even for tech companies, some of the most profitable and valuable in the world, offices are still an expense and probably won’t matter in the future.”
Big tech companies have been at the forefront of larger issues that are changing the future of the world of work. From the ability to work remotely anytime, anywhere supported by Meta, to simply spending less time in the office and more time at home, big tech companies, because they often develop infrastructure and products that support remote work, are more traditional. more willing to experiment with this concept. According to the US Bureau of Labor Statistics, 27% of US “computer and math” workers have worked remotely at some point in the past 4 weeks. “The pandemic has shown that remote work is not only entirely feasible for many companies, but also something that many employees really enjoy and can be more productive,” Ismail said. On August 2, the Financial Times reported that Instagram CEO Adam Mosseri was moving to London, away from Meta’s California headquarters. Mosseri’s colleagues include Javier Olivan, who has been in Spain longer since taking over from Sheryl Sandberg as chief operating officer, and Guy Rosen, vice president of corporate ethics, who plans to move to Israel.
Phil Ryan, director of urban futures and global analysis at real estate consultancy JLL, said that while many big tech companies are cutting their job portfolios, others are continuing to buy, making the market a mixed bag. These purchases tend not to come from the homes of traditional big tech companies along the coast, but inland, to places like the suburbs of Phoenix, Arizona. However, Ryan acknowledged that what he calls “rationalization” of office space has taken place in some large companies. “There are many companies, especially in the Bay Area, that have multiple offices in a given metro area to consolidate this space,” he said.
Mergers are particularly prevalent in San Francisco, where London Mayor Breed estimates that a third of the people who used to work in the city have now left. According to JLL, by the end of the first quarter of 2022, the vacancy rate in San Francisco will be 22%. In Dallas, where other tech companies have set up outposts, more than a quarter of office space is empty.
This has huge implications for the wider real estate market in the US and abroad. According to Ismail and Ryan, tech companies account for between one-fifth and one-quarter of all office space activity. Their departure leaves a huge amount of office space unoccupied, which has an impact on the entire city and the services created to support these jobs. “If you think about the jobs themselves, it has a big impact on the local economy,” Ismail said. “Tech jobs tend to create more office jobs around them, so it’s important for many office markets to have a strong tech sector.” drinking and entertainment.
According to an analysis by the Computing Industry Association, the technology industry alone contributes $516 billion to the California economy, and 3.4 million people are employed in the technology industry across the US to support technical professionals involved in software development and network architecture.
While Twitter claims that its office shifts “have no effect” on work, that’s only partly true. Everyone who supports office workers loses, from cleaners to security guards to food service providers. “What worries me is that smart people can’t find a way to make hybrid work because it looks like they’re doing it somewhere else,” one Twitter employee said. News. “Those who provide employee benefits suffer the most.”
Big technologies have a big impact on the rest of the world. “For at least a decade, technology has been the main driver of leasing activity in the US,” Ryan said. But this is changing. While he’s still analyzing the data, Ryan said second-quarter numbers suggest things could change. “Technology and finance are basically tied together,” he said, “which is a bit unusual and speaks to the vulnerability we still have in the market right now.”
Ryan believes big tech companies will continue to rent office space in large numbers and will continue to be a major contributor to real estate transactions in the coming years. But it will enter markets that traditionally cannot be identified with the industry. “We’re going to continue to see this kind of attention on River North in Denver, East Austin, Wynwood in Miami — places that aren’t really traditional businesses or even active areas at all, but are becoming the biggest bright spots in the office. market, which is the result almost exclusively of investment in technology,” he said.
This comes at the expense of the more traditional areas of Silicon Valley and its environs that have historically been dependent on the tech industry. But instead of a major overhaul, Ismail equated changes to the way we work with “slow bleeding.” “It won’t happen right away,” he said. “It happens over time – over time, that’s what we see.”
Post time: Feb-08-2023