Big Tech has been a major driver of office leasing activity in recent years. But that may soon change.
The coronavirus pandemic has heralded a remote-work revolution, with heavyweights Facebook, Twitter and Shopify all announcing plans to shift toward more permanent work-from-home setups. Now, other tech companies — seeing the potential cost savings — could follow suit.
But until then, it’s something that Facebook, Twitter and Shopify’s landlords will watch for. Altogether, the companies lease 12.6 million square feet of office space in the U.S., according to data from CompStak. So which landlords and cities will be hit hardest when those three tenants leave the office world behind?
Shorenstein Realty is the landlord most exposed, with more than 1.5 million square feet leased to Facebook and Twitter, according to CompStak. The San Francisco-based firm’s real estate holdings span 25 million square feet nationwide, according to its website, meaning those two tenants account for 6 percent of its entire portfolio.
The next three landlords on the list include San Francisco-based Jay Paul Company (1.49 million square feet); a joint venture between Mitsui Fudosan America, Related Companies and Oxford Properties (1.22 million) and Palo Alto-based Peery Arrillaga (1.2 million).
In New York, the most exposed include the Mitsui Fudosan America, Related Companies and Oxford Properties joint venture, Vornado Realty Trust (769,633) and Columbia Property Trust (664,196). (And Facebook is reportedly near a deal for another 740,000 square feet at Vornado’s Farley building.)
As for the most exposed markets, Facebook, Twitter and Shopify’s leases are largely clustered on the coasts. These companies have leased up nearly 7 million square feet of office space in California, 3.2 million in New York and 1.6 million in Washington. By contrast, those firms only have about 300,000 square feet in active leases south of the Mason Dixon line.
It’s no surprise that most of the West Coast leases are concentrated in the Bay Area, where many tech companies are headquartered. The top five cities with the most exposure are: New York City (3.2 million square feet), San Francisco (2.4 million), Menlo Park (1.2 million), Fremont (1.2 million) and Sunnyvale (1.1 million).