Roku disclosed last month it planned to spend between $30 million and $35 million to downsize its office footprint across the country, a rollback that includes its large lease at a top Times Square office property.
Some of the streaming company’s space on the chopping block is at least two of its eight floors at RXR’s 5 Times Square, which CBRE marketing materials reported by CoStar say is up for sublet.
Roku is trying to turn the channel on the hefty lease it signed slightly more than a year ago. The company in Jan. 2022 inked a long-term lease at the building for 240,000 square feet. The lease also gave the company control of the building’s vertical exterior sign.
Roku reportedly spent six months negotiating the lease and even improved its offer by 100,000 square feet. The asking rent per square foot was in the $90s.
The company has 14 locations across the country, leasing approximately 1.3 million square feet. Among its other prominent leases are a 72,000-square-foot slice of Boston Properties’ Colorado Center in Santa Monica, which was signed two years ago.
RXR did not immediately respond to a request for comment.
The company’s plan to sublease unoccupied office properties or terminate leases was disclosed in a regulatory filing last week, which also revealed the company was laying off 200 employees — its second round of cuts in six months.
Most of the expenses of the cost-cutting moves were set to be absorbed in the first quarter, while the layoffs are expected to be completed by the end of the second quarter. The moves come after Roku’s net loss more than doubled to $498 million last year, despite a 13 percent rise in net revenue.
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Roku’s downsizing in Manhattan places it alongside other tech giants, like Amazon and Meta, that started shedding space late last year in response to the persistence of hybrid work and a cost-cutting measure on top of mass layoffs.
Tech firms were looking to sublet a crushing 30 million square feet across the country as of November, up from 9.5 million square feet in the fourth quarter of 2019, CBRE data show. The ballooning figure is roughly 14 percent of the sublease space available on the overall market, which CoStar casts at a record 212 million square feet.
— Holden Walter-Warner