A combination of layoffs and flex work is leading a cluster of tech companies to reduce their New York City offices by millions of square feet. According to The New York Times, Meta, Spotify, Twitter and Roku are all downsizing, with some choosing not to renew certain leases and others trying to sublet some of their space. In total, more than a third of roughly 22 million square feet of office space available for sublet comes from tech, advertising and media companies that have put it back on the market.
- Despite this, at 13.5%, Manhattan’s vacancy rate is well below that of San Francisco (25.6%) and Austin (25%).
- In addition, Google and Amazon are bucking the trend. Both companies have plans to expand their NYC offices.
By Tiffany Moustakas, Editor at LinkedIn News
Like San Francisco, NYC is developing plans to better prepare the city for a greatly changed “downtown”. A common theme is converting office space into residential areas to address the growing housing affordability gap. It’s an admirable, if not, ambitious vision, but like San Francisco and other cities, cutting through the molasses of government bureaucracy remains a hurdle.For better and for worse, the tech industry has played a significant part in fueling and powering the economic growth of this country. And it will continue to do so. But as with anything, change is always on the horizon, and cities that relied on the sector as their cash cow are now being forced to change. As history has shown before, those who acknowledge and adapt to change quickly often have a competitive
Tech Firms Once Powered New York’s Economy. Now They’re Scaling Back.
BY: Albert Fong
New York City is facing its own marathon. The Big Apple Tech companies have long been a bright spot in New York’s economy, adding thousands of high-paying jobs and expanding into millions of square feet of office space. Now they are pulling back hard, clouding not only the economic future for the Big Apple, but for other cities as well. But the reasons go beyond the tech sector.
Look no further than the 14% office vacancy rate in NYC, and you’ll see something that hasn’t happened in a long time. It’s a sign of the tech sector in transition, a transition that’s happening in other cities. Austin, for example, has a vacancy rate of 25%, while San Francisco is even worse off with a vacancy rate hovering at 30% depending on who you ask.
There are a number of factors in play. The most obvious is the uncertain economy and rising interest rates, which has led to a big decline in venture capital funding. By itself, that’s caused a shakedown of borderline revenue lacking startups leading to downsizing, consolidation and shutdowns.
Even without the economic weirdness, the sweeping changes in the nature of work has had a tremendous impact. Remote and hybrid work is now the norm regardless of companies and their return to office mandates, which has more companies scaling back on office space and ditching leases. At the current pace, the vacancy rates are likely to increase further through 2026 as leases expire and companies scale back on elaborate workspaces.
The urban doom gloom is real. All of this has a ripple effect on the country’s downtown and financial districts. In San Francisco’s downtown area, city blocks formerly packed with office workers and bustling businesses are practically ghost towns. That’s certainly impacted small businesses whose clientele has primarily been driven by the office worker economy. Like cities across the country, those who have survived through the pandemic are facing a new and not so welcoming post-pandemic reality.