Facebook parent Meta is trying to dump another chunk of its previously vast real estate portfolio as the social media giant sheds assets in a process expected to cost more than $2 billion in impairment and termination expenses.
The Menlo Park, California-based company has listed a 113,585-square-foot building it has been leasing in Fremont, California, up for sublease, the latest office closings Meta has pursued across the country in recent months to curb costs and adjust to slowing revenue growth. More such closings are expected.
Meta has enlisted JLL to help land a subtenant for the property at 6900 Dumbarton Circle, according to marketing materials. Meta signed the lease for the Fremont building as part of a broader East Bay expansion throughout 2020, adding more than 460,000 square feet to its regional footprint.
The Facebook parent still occupies the properties at nearby 6700, 6750 and 6800 Dumbarton Circle, according to CoStar data, with the three buildings leased in the early days of the pandemic when the company was scrambling to keep up with unprecedented growth.
Similar to other other social media companies, Meta benefited from a financial boost during the pandemic lockdowns when people stayed at home and spent most of their time in front of a phone or computer screen. However, macroeconomic challenges and declining advertising revenue over the past year have meant companies are prioritizing profits over growth.
The company is now among a host of Silicon Valley tech giants making deep cuts to their real estate portfolios by shutting down office locations, subleasing unwanted space, terminating prelease agreements and walking away from future investments.
“The past few years have brought new possibilities around the role of the office, and we are prioritizing making focused, balanced investments to support our most strategic long-term priorities and lead the way in creating the workplace of the future,” a Meta spokesperson said in an emailed statement. “Our aim is to build a best-in-class remote work experience to help everyone do the best work of their careers no matter where they are.”
Meta last month closed an office at 225 Park Ave. in New York and terminated a lease for two office buildings in Mountain View, California. It is trying to consolidate its footprint in San Francisco with plans to end the lease for its main office at 181 Fremont St. — a roughly 431,900-square-foot deal that isn’t set to expire until March 2031 — and consolidate its operations in the nearby 250 Howard St. building.
The Silicon Valley company, which last month said it would lay off about 11,000 of its employees, also decided to back off plans to expand in Austin. Less than a year after signing the largest office deal in the Texas city’s history, Meta last month listed for sublease the roughly 589,000 square feet it had planned to fill at Lincoln Property Company’s Sixth and Guadalupe tower.
Meta’s more than 250,000-square-foot lease across the two towers at 30 and 55 Hudson Yards in New York will also soon be vacated after the company decided not to renew its deal with landlord Related Cos. The social media company declined to specify how much space it had put up for sublease or where it was considering future office closures.
The company said on its earnings call last month it expects to take a roughly $2 billion hit before the end of 2023 related to consolidating its offices and exiting space.
The moves have been a worrisome sign for the national commercial real estate market, which in cities such as San Francisco, New York, Seattle and Los Angeles has come to rely on blockbuster tech leases for rent growth, spillover demand and a source for investor confidence.
What’s more, the move to pull back on real estate expenses comes as businesses plan to slow the pace of hiring.
Google parent Alphabet, for example, said last week it plans to slow hiring and only invest in employment growth on an as-needed basis.
— to news.google.com
