Kristopher Chad Disharoon’s Post

What I Read This Week... -**Google is Leaving SF**: Google has decided to vacate its office tower in San Francisco, marking a significant shift in its operational footprint within the city. [Read more](https://lnkd.in/dVDjgG63) - **Omega is Leaving SF**: Another iconic name, Shreve & Co., is also leaving San Francisco's Union Square, signaling changes in the retail landscape of the area. [Read more](https://lnkd.in/dHEAWjU9) - **Decoding Neuronal Variability: Bridging Shape and Behavior**: A fascinating study that delves into how neuronal variability can be decoded to understand the relationship between neuronal shape and behavior. [Read more](https://lnkd.in/dYnaSmbf) What a time, what a time! Sounds like it’s time to bring some new ideas into San Francisco.

Google’s Latest Sublease Move Shows Global Tech Giant Isn’t Done Shedding Real Estate Alphabet Subsidiary Lists Two Silicon Valley Offices in Extension of Widespread Cuts to Space, Workforce - Alphabet, Google's parent company, is continuing its trend of shedding real estate, with a recent move to sublease two Silicon Valley office buildings in San Jose.    - The listed properties, totaling nearly 174,000 square feet, mark another step in Google's ongoing effort to reduce its real estate footprint. - Google originally leased these properties in late 2015, but now seeks to offload them as part of its broader real estate restructuring. - The tech giant's reduction in real estate holdings aligns with its focus on profitable growth and high-priority initiatives like artificial intelligence. - Last year, Google incurred over $1.8 billion in expenses related to restructuring, including significant layoffs and office closures. - The company also spent more than $2.1 billion in severance and other charges associated with reducing its workforce, resulting in a notable decline in its employee count. - Google's approach mirrors that of other Silicon Valley tech companies, which have similarly cut back on real estate holdings by closing offices and subleasing space. - With this latest sublease listing, Google adds to the approximately 2 million square feet of office space it offloaded in the previous year, contributing to the surplus of available office space in the Bay Area.

Quartz recently reported, “when it presented its latest annual report in January, Google parent company Alphabet Inc. noted that it had paid $1.8 billion in ‘exit charges’ on leases last year as part of efforts to ‘optimize’ its global office footprint.” As industries continue embracing #remote and #hybrid work arrangements, strategic lease management will be critical in understanding current obligations, as well as what should be prioritized in future leases. https://lnkd.in/eEgZfhtu

Google’s decision to renew major leases in both New York and Irvine marks a potential turning point for tech companies re-evaluating their office needs. After a prolonged period of downsizing, these strategic renewals indicate a more stabilized approach to real estate, balancing cost management with future growth plans. This could signal renewed confidence in key markets, setting the stage for more companies to reconsider consolidations or even expansions. A positive trend for both office space demand and local business ecosystems.

Remember back in 2018 when cities were exploited to bid for Amazon's HQ2? Be careful what you wish for. NYC and Arlington, VA bid $2 billion in subsidies to lure HQ2, just in time for the pandemic and WFH. Big tech continues to cut back on office space in major cities. For example, despite the recent PR campaign to convince that San Francisco was in recovery mode, largely due to massive funding for a few LLM firms hiring few people, the city's commercial vacancy rate hit a new record in Q1 at 36.7%. It was 3.6% in early 2019. That's an enormous amount of asset value wiped out. I wonder how much of it has actually been reflected in net worth statements across the country (other markets are also feeling the pain, though not as much as SF). An excellent example of why regional economies should seek healthy diversification rather than concentration in any one sector, or even worse, domination by one or two companies. Here in SF/ABQ NM the federal labs are the greatest economic engines, along with the state of NM. In terms of revenue the state has become much too dependent on O&G from SE NM. I read a report recently that claimed about half the state budget is now from O&G revenue, up from a third just a few years ago. Scary level of dependence in just O&G and government.

Most of the news about office space is negative. But amidst the negative press, two positive pieces of real estate news surfaced in my e-mail this morning. 1. Google's 1.3M sq. ft. office at St. John's Terminal opened on Wednesday. Starting next week, this will be the office for 3,000 (lucky) Google employees. 2. Construction has fully topped out on J.P. Morgan's new headquarters under development at 270 Park Avenue. This 60-story building is 2.5M sq. ft. and will have the ability to house 15,000 J.P. Morgan employees when it opens in ~2026. Both of these projects are extremely noteworthy and massive real estate undertakings involving significant financial resources and personnel. I can't wait to tour both buildings sooner rather than later... if you work in real estate or are even just slightly interested by it, these two buildings are ones to see. #commercialrealestate #realestate #officespace #development

For future of work and how to get people back, not just in the office but back to human interaction and connection, check out what Google is doing! I know, we all aren't a trillion-dollar company with millions of dollars to spend on office space. But we should learn from what others are doing that is working and think about what is the space that makes people want to come back in or if they have to come back to a hybrid space. And what is the space that allows them to be productive and collaborative vs not just in and unproductive and miserable. And just like shows on extreme home makeover on a budget, I think there should be shows or content shared of extreme office makeovers and the changes companies did to create a more useable, workable workspace for now! Loved to see and hear what Google did and the why. And have always used the term neighborhoods with some of my team, because every neighborhood or working team is unique in how they work and what they nee. Look forward to your thoughts Brent Matthews when we catch up for coffee!! #officedesign #officedesignofthefuture #bestplacestowork #spacewithgoodenergy #badofficespace

Big tech companies are downsizing their office space in major coastal cities, causing steep losses for some landlords. This marks a sharp reversal after years of expansion, with companies such as Amazon, Facebook, and Alphabet adding millions of square feet of office space. #realestate #bigtech #office #commercial

Big Tech’s shift to remote work is reshaping the commercial real estate landscape, leaving landlords with empty office space and growing losses. As companies like Amazon, Meta, and Google downsize their office footprints, the sector faces challenges, with distressed properties reaching $86 billion in value. The solution may lie in repurposing outdated buildings into housing units, as NYC leads with 55,300 units scheduled for conversion. #RealEstate #TechTrends #CommercialProperty Photo: Pawel Chu via Unsplash

Big Tech retrenchment continues-which should come as no surprise given the historical correlation between interest rates and technology leasing take-up (ie-in cycles of sustained rate decreases, tech leasing reached historical highs-and vice versa). The good news is other industries (notably big law and finance) are picking up some of the slack in the NYC market as occupiers rally around new ways of working.