Meta poised to make more real estate cuts this year

Tech giant spent $1.1B to downsize in first half of 2023

Meta's Mark Zuckerberg, 300 West 6th Street (Getty, 300 West 6th Street)
Meta's Mark Zuckerberg, 300 West 6th Street (Getty, 300 West 6th Street)

Meta spent more than $1 billion reducing its real estate footprint in the first half the year, but there are still cuts coming.

Mark Zuckerberg’s tech giant plans on further reducing its real estate portfolio in the second half of the year, Bisnow reported, as part of plans announced before the year even started to spend more than $3 billion on office reductions.

The specifics surrounding the continued downsizing, first reported by CoStar, are unclear. In the first quarter, the company spent $850 million in downsizing expenditures, followed by a significantly smaller $250 million in the second quarter. Still, that means the largest of the reductions could be yet to come.

The company plans to spend $4 billion this year on employee severance and facility consolidation, chief financial officer Susan Li said during the company’s second quarter earnings call. The former is reportedly expected to slow in the second half, which suggests more room for real estate cuts.

The company spent $413 million to reduce its real estate footprint in the third quarter of last year and expected to spend $900 million more for office realignment in the fourth quarter of 2022.

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A number of Meta’s office decisions in recent months have been front page news.

Last month, Meta moved to sublease more than 100,000 square feet at 300 West 6th Street in Austin, Texas, on top of 589,000 square feet it was already subleasing at a different building in the city. It also put a 122,000-square-foot space in Washington, D.C. up for sublease last month.

Meta decided in November it would return two spaces at Hudson Yards in Manhattan after the respective leases expire at the end of next year. Those spaces span 250,000 square feet.

Meta is not alone in reducing office space in the past year, as other major technology companies have sought to do the same, to the detriment of landlords. Yet those same landlords hope for other companies to follow Meta’s lead on a different issue: it is requiring employees to be in the office for a majority of the week beginning in September.

Holden Walter-Warner

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