What happens when tech companies hire like crazy and don’t lease new office?
The answer: Pent up demand.
As we expected, tech companies have started buying and leasing office space for all their new employees, despite hybrid workforce models. This was evidenced by three major announcements this month:
- Meta (Facebook) signed a 719,037-square-foot lease at a Sunnyvale office campus owned by New York-based real estate developer Tishman Speyer.
- LinkedIn paid $122.8 million for two buildings in Sunnyvale for office space and research. The company also has leased 194,600 square feet across the street from the two newly acquired buildings.
- AGC Equity Partners, a London-based investment company, forked out $780 million for three buildings in a San Jose office complex near San Jose International Airport.
The Meta lease boosts that company’s presence in Silicon Valley by 50 percent, from around 2.5 million square feet to about 3.75 million.
These are on top of Apple leasing nearly 700,000 square feet in Sunnyvale earlier this year and moving forward with plans for a new campus in north San Jose.
The announcements should put a final nail in the coffin of the myth that there’s a huge tech exodus from Silicon Valley. This Mercury News headline, “Meta, Apple mega leases, huge property deal counter exodus fears,” sums it up nicely.
Meta’s lease “represents the largest new private-sector office lease executed anywhere in the U.S in 2021,” The Registry reported. Tishman Speyer acquired the campus earlier this year from NetApp, which in turn moved its headquarters to San Jose.
All the recent leasing and purchase deals, The Mercury News reported, “suggest that tech companies are not fleeing Silicon Valley en masse as some pundits have prognosticated. Instead, tech companies of varying sizes — including the largest firms — have taken steps lately to strengthen their footholds in Silicon Valley.”
“Silicon Valley remains the global center of innovation and its importance will continue to grow even as other innovation hubs emerge,” The Registry quoted Tishman Speyer President & CEO Rob Speyer saying. “We were always convinced that the tech sector would maintain a strong appetite for high-quality collaborative spaces and are excited Sunnyvale will house one of the world’s leading companies.”
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