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Konrad Putzier at The Wall Street Journal delivers more reality to baffled landlords. Big technology companies are cutting back on office space across major coastal cities, leaving some exposed landlords with empty buildings and steep losses. Now, big tech companies are letting leases expire or looking to unload some offices. Amazon is ditching or not renewing some office leases and last year paused construction on its second headquarters in northern Virginia. Google has listed office space in Silicon Valley for sublease, according to data company CoStar Group. Meta has also dumped some office space and is leasing less than it did early on in the pandemic. Salesforce has dumped 700,000 SF in the last year based on SEC filings. Total leased space now at only 900,000 SF. Office space listed for sublease in 30 cities with a lot of technology tenants has risen to the highest levels in at least a decade, according to brokerage CBRE. Amazon’s lease expires this year at 1800 9th Ave in Seattle and the company is moving out. The building is listed for sale. It is expected to sell for about a quarter of its 2019 price, according to estimates by real-estate people familiar with the property. The real question is this...who is foolish enough to buy this property where the national demand for office space is crumbling everywhere and the bottom is nowhere in sight?

Successful Google search: Tech giant finds property bargain in New York City Google recently opened its newest New York City facility at the St. John’s Terminal, a rail facility in Manhattan, Forbes reports. The tech giant is one of several major companies that have found relative bargains in the Big Apple because of a depressed market for office space. Google bought the 1.3-million-square-foot former rail terminal at 550 Washington St. in Manhattan’s Hudson Square neighborhood for $1.97 billion. Other major firms that have done well bargain hunting include: Wells Fargo, which bought over 400,000 square feet of space at 20 Hudson Yards for $408 million; Enchanté Accessories, which bought a 12-story building at 147-149 Madison Ave. for $77 million; and Hyundai, which acquired 15 Laight St. in Tribeca for $275 million. Read more: https://lnkd.in/gyp8sY74 #ThomasTitleandEscrow #CommercialRealEstate #TitleTrove #Google #Office #NewYork

Artificial intelligence has been a big boon for San Francisco real estate. But not enough of one to make up for the broader struggle across the market. The vacancy rate for San Francisco office space reached a fresh record of 34.5% in the second quarter, according to a report Monday from commercial real estate firm Cushman & Wakefield. That’s up from 33.9% in the first quarter, 28.1% in the same period a year ago and 5% before the pandemic. Meanwhile, the average asking rent dropped to $68.27 per square foot in the quarter, the lowest since late 2015, down from $72.90 a year earlier and a peak of $84.70 in 2020. San Francisco is reeling from the twin challenges of bringing people back to the office after the Covid pandemic and a slowdown in the tech market that’s led to mass job cuts across the industry. Tech companies have laid off more than 530,000 employees since the start of 2022, according to the website Layoffs.fyi, with major downsizing at Alphabet, Meta, Amazon, Tesla, Microsoft and Salesforce ... Softening the blow of late has been the soaring popularity of generative AI and the decision by fast-growing startups to open large offices in San Francisco. OpenAI, the market leader with a private valuation that’s topped $80 billion, announced in October that it was leasing about 500,000 square feet of space in the Mission Bay neighborhood, the biggest office lease in the city since 2018. Robert Sammons, senior research director at Cushman & Wakefield, said OpenAI is continuing to look for more space in the city. Also last year, OpenAI rival Anthropic subleased 230,000 square feet at Slack’s headquarters. And in May of this year, Scale AI signed a lease for a reported 170,000 to 180,000 square feet of space in Airbnb’s office building. “San Francisco is certainly the center of AI, but AI is not going to save the San Francisco commercial real estate market,” Sammons said. “It will help.” While richly capitalized AI startups are signing large leases for new space, the bigger trend is that tech companies, law offices and consulting firms are looking to reduce their footprint when existing leases come up, Sammons said, reflecting the widespread move to hybrid work.

From Google's "sail tower" to Meta's strategic subleasing moves - how's Austin's office market? As we navigate through new workplace dynamics, Austin's #CRE sector is responding with agility and foresight. Our Carl Condon said he believes that the market will see more leasing activity in the tail end of 2024, which will lead into a positive cycle in 2025 -- and anecdotally there's been more activity in the market recently from tenants seeking office space sized 20,000 sf and above. What do you think of Austin's office market? Let us know in the comments. Austin Business Journal: https://lnkd.in/eFxYNSRX

Large technology companies (including Amazon, Google, and Meta) are cutting back on office space. Tech companies expanded their office footprints in large coastal cities during the pandemic and provided a lifeline to some office landlords. But companies have reversed course due to remote work and downsizing; they are now letting leases expire, looking to sublease, or negotiating to surrender space to their landlords. Last year, Amazon halted construction of its second headquarters in Arlington, Virginia. Google is trying to sublease some of its Silicon Valley office space and Meta has paid large sums to exit leases early. "Tech giants looking to unload part of their workplace face a lot of competition. Office space listed for sublease in 30 cities with a lot of technology tenants has risen to the highest levels in at least a decade, according to brokerage  CBRE. The 168.4 million square feet of office space for sublease in the first quarter was down slightly from the fourth-quarter 2023 peak but up almost threefold from early 2019. Even tech companies that are renewing or adding space want less than they did before. The amount of new office space tech companies leased fell by almost half in the fourth quarter of last year compared with 2019, CBRE said."

OpenAI signs NYC lease as AI companies fuel office real estate revival Growing demand for AI talent has led to a surge in office space acquisitions OpenAI, the company behind ChatGPT, is spearheading a resurgence in office real estate among tech companies. It has signed its first New York lease as it continues its rapid expansion. According to sources familiar with the matter, the San Francisco-based artificial intelligence (AI) leader has signed a lease for 90,000 square feet in the Puck Building in Manhattan’s SoHo district. This New York deal follows OpenAI’s real estate growth on the West Coast. Last month, the company took over Old Navy’s former San Francisco headquarters, adding 315,000 square feet to its footprint. According to CoStar, this was the largest office lease in San Francisco this year. It followed OpenAI’s subleasing of two buildings from Uber in San Francisco’s Mission Bay in 2023, making it one of the largest office tenants in the city.

🔍 AI Fuels Optimism in San Francisco’s Office Market Recent data reveals that AI companies are significantly impacting San Francisco's office market: - 25% of all leasing activity in San Francisco since 2023 is driven by AI tenants. - AI firms are leading the market in net positive demand, one of the few sectors expanding their footprint. - Paramount Group noted “clear signs” of increased demand, largely due to AI companies prioritizing in-person collaboration. - Hudson Pacific Properties reported improvements across West Coast markets, with San Francisco showing the most promise. Crime is down, transit ridership is up, and sublease availability is declining. San Francisco’s office market, once struggling, is seeing a resurgence thanks to the rapid growth of AI, making this sector a key player in the city’s commercial real estate future. https://lnkd.in/gpqXWZwM

Could the rise of AI possibly boost office demand? Our very own CEO, Charles Clinton, shares a few insights in Commercial Property Executive's latest article on the topic: “These firms will create a blast radius of demand in real estate markets,” he reasoned. “Smaller firms will pop up to benefit from the talent that the larger firms draw and to create ancillary value-add services on top of the fundamental AI progress delivered by larger firms. An influx of highly compensated employees will create demand for coworking space, coffee shops and yoga studios, creating demand for flex office space, retail, mixed-use space as well as multifamily. We saw the same thing happen with Microsoft’s impact on the Greater Seattle area, and Google’s impact on Silicon Valley and the South Bay.” Read the full article here: https://lnkd.in/e32vZzAj #CommercialRealEstate #Office #RealEstateInvesting #MarketInsights

In the Stockholm suburb of Kista, which has long been a key tech hub for companies like Ericsson, Microsoft, and several other major brands, as well as the home of the Royal Institute of Technology (KTH), there have been several negative developments recently. Ericsson is considering relocating and may vacate between 50,000 and 100,000 square meters of office space. Additionally, Coor a facility management company, has decided to leave Kista, and Microsoft moved its office from Kista to central Stockholm some time ago. This shift is partly due to the increasing prevalence of remote work, which has made suburban offices like those in Kista less attractive to employees. Many employees now prefer centrally located offices where the social environment is safe, vibrant, and diverse. For companies looking to attract their employees back to the office and also recruit new talent, it’s essential to offer modern, high-quality office spaces, ideally in central locations. This trend is not just limited to Stockholm but is also seen in other major cities like, London, and Paris. Suburbs are facing greater challenges in competing for new tenants, especially as more companies choose centrally located offices. This shift could have a negative impact on real estate companies with portfolios outside of city centers, affecting their stock prices. For example, Corem’s stock dropped by almost 10% on a trading day,just based on the rumor that Ericsson might move out. If you relate the stock price of Corem to the amount of space rented by Ericsson, you can quickly estimate that the market values a lease at roughly ten times the annual rent. This is particularly interesting for tenants to understand the significant power they hold when negotiating lease agreements. If, for instance, your rent is 3 000 SEK per square meter, the stock market may value your lease at approx ten times that amount. Therefore, always renegotiate your leases carefully to ensure you’re getting the right price, as tenants have much more influence than they might realize. You better call Cresnia

Amazon is not the only one. There is a lot of buzz lately around heading back to the office. Here is an interesting read on tech giants working with designers to create strategies for the next generation of office + workplace designs. Architecture firms are among those gearing up for a return to the office and are keen to implement some of the innovations they’ve been developing during our time away. Several practices have been exploring the use of pre- and postoccupancy sensor technologies to better understand how workspaces, large and small, are employed and how different forces interact. Developed in-house at KieranTimberlake, LMN Architects, and ZGF Architects, these multifaceted systems and applications provide their design teams and clients with objective feedback that can supplement the more subjective information generated from surveys. Overall, the data sourced through these solutions can help architects design and lay out spaces that are more conducive to our changing needs in a post-pandemic world. What are your thoughts on this?