Meta, Salesforce shedding huge chunks of office space
Tech giants subleasing a combined 240K sf amid company layoffs
The technology sector’s real estate pullback has hit Chicago.
Tech companies Salesforce and Meta are shedding a combined 240,000 square feet of office space, resulting in two of the largest sublease listings in downtown Chicago.
Salesforce is subleasing 125,000 square feet at Hines’ newly built Salesforce Tower at 333 West Wolf Point Plaza, and Meta is looking for a tenant to take 115,000 square feet off its hands at the John Buck Company-owned 151 North Franklin Street, CoStar News reported.
Both companies occupied a large portion of real estate at each site. Salesforce’s offering at its namesake building amounts to a 25 percent cut to the 500,000 square feet it had committed to leasing.
While Salesforce could still technically occupy the space at some point, many other tech firms have cut real estate costs in conjunction with making layoffs and as the sector’s stock market performance slipped over the past year and uncertainty blanketed the economy.
Meanwhile, Meta is cutting back 44 percent of its lease in the 35-story Franklin Street building. The two companies are both downsizing and cutting costs amid several rounds of layoffs.
The moves reflect Chicago’s struggle to rebound from the pandemic, which birthed the trend of working remotely and caused vacancy rates to soar. With the tech giants jumping ship from big portions of their leases, the city now has 7.8 million square feet on the sublease market to fill, up 4.5 million from when the pandemic began.
Yet, the tech sector is still a source of hope for commercial real estate players. Google has committed to purchase the entire 1.2-million-square-foot James R. Thompson Center as part of a significant expansion of thousands of employees.
In addition, the as Mark Zuckerberg’s Meta cuts back, he and his wife Priscilla Chan’s Zuckerberg-Chan Biohub initiative has leased about 26,000 square feet in Trammell Crow’s Fulton Labs building in Fulton Market, where the initiative plans to spend $250 million on launching a biotech research collaboration between top Chicago universities.
Companies in sectors outside tech have been chopping office space, too. Earlier this year, Paris-based public relations firm Publicis Groupe put up 350,000 square feet for sublease in the Leo Burnett building at 35 West Wacker Drive, and Tyson Foods is also aiming to fill more than 200,000 square feet in the West Loop after announcing it would move 500 employees to Springdale, Ark., from Chicago and suburban Downers Grove.
— Quinn Donoghue
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