Tech Layoffs Mean Even More Empty Offices in NYC, San Francisco
A pullback by tech tenants means trouble for landlords already struggling with empty buildings.
Salesforce Inc. is paring its real estate as part of sweeping cost cuts. Compass Inc., reeling from a housing slowdown, has put its New York headquarters up for sublease. Meta Platforms Inc. is giving up Manhattan offices that it recently built out.
Major US office markets were already struggling with empty buildings as flexible work becomes the norm. Now, mounting layoffs and corporate cost cuts threaten to worsen the glut, particularly in New York and San Francisco — two finance and tech hubs with economies that are heavily dependent on office workers.
Both cities ended 2022 with a rising supply of space and leasing demand still far below historical averages, according to reports this week from brokerage CBRE Group Inc. In San Francisco, the office-vacancy rate soared to a record 27.6%, compared with just 3.7% before the pandemic.