As Meta moves to shrink its office footprint, the Facebook parent is backing out of a plan to fill a new building in downtown Austin.
The tech giant plans to sublease rather than occupy the 589,000 square feet it leased at Lincoln Property Company’s Sixth and Guadalupe, The Real Deal has learned.
The massive lease, announced in January, is for all of the office space at the under-construction, 66-story tower, and is one of the largest office leases in city history.
Lincoln Property Company declined to comment, but Andrea Beasley, a spokesperson for Meta, confirmed the decision.
“We are currently evaluating our real estate portfolio globally, and making focused, balanced investments to support our most strategic long-term priorities,” Beasley said.
It’s not just Austin: Last week, Meta executives said on an earnings call that the firm expects to spend more than $3 billion to decrease its office footprint. The company already shelled out $413 million last quarter to end office leases and expects to spend another $900 million this quarter.
“Some steps, like the ongoing rationalization of our office footprint, will lead to incremental costs in the near term,” said Dave Wehner, the company’s chief financial officer.
By subleasing instead of canceling its deal for the Austin building, Meta would avoid the termination fee standard in most lease agreements. But sublease rents are typically much less than what the original tenant pays.
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Austin has experienced one of the strongest return-to-office trends in the nation, and Sixth and Guadalupe is one of several Class A spaces under construction across the city. Blue-chip developers have been drawn not just to the Central Business District, but also to neighborhoods like the Domain and South Congress.
But Meta’s step-back comes amid signs that not everything is chipper in the Austin office market. Last week, developer Kilroy halted plans to build its 493,000-square-foot Stadium Tower, citing economic uncertainty.
Sixth and Guadalupe is expected to secure its office and retail certificate of occupancy in the spring.