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Wave Of Tech Layoffs Hasn't Hit Atlanta, But Office Demand A Different Story

Tech companies have laid off more than 88,000 employees across the U.S. this year amid cost-cutting efforts as the economy heads toward a possible recession. But in Atlanta, where tech companies have been growing rapidly in recent years, the local industry workforce has been relatively unscathed.

While Atlanta tech workers might be safer than their peers in San Francisco, Seattle and New York, their employers are still looking to reduce their real estate costs. 

The tech industry makes up nearly 18% of Atlanta's record deluge of sublease space, according to a recent Savills report, as those firms attempt to unload unused space and recalibrate their footprints as they move more to a hybrid workforce.

Atlanta's diverse tech talent is one of the key factors shielding the metro area from massive layoffs, experts say.

So far, only a handful of technology and tech-related companies have announced significant layoffs in Metro Atlanta, according to the Georgia Department of Labor Worker Adjustment and Retraining Notification database, with Twitter being the biggest name to lay off locals.

Despite announced layoffs at Meta, Amazon, Microsoft and other tech giants, the state labor department has yet to receive word if cuts will be made locally, Georgia Labor Commissioner Mark Butler told Bisnow. Tech insiders say Atlanta is positioned as a city where companies want to increase staffing, rather than reduce it.

"There are a lot of efficiencies that I don’t want to say make Atlanta immune to the economy,” said Larry Williams, CEO of the Technology Association of Georgia. “But Atlanta is viewed as an asset to the tech industry in terms of recruiting talent in the marketplace.”

Butler said Atlanta has more affordable tech talent than other tech hubs. According to GlassDoor, the average tech salary is nearly $54K per year in Metro Atlanta, a far cry from the average annual salaries of $174K in the San Francisco Bay area, $168K in Seattle, $161K in New York and $159K in Boston, according to a 2022 study by the recruiting firm Hired.

“It doesn’t make a whole lot of sense to start an expansion plan and then suddenly lay everyone off,” Butler said. “If companies look to cost-cutting, they’ll do so where labor is more expensive.”

While tech companies may spare their headcounts in Metro Atlanta, office landlords are contending with the amount of space they have placed on the sublease market, especially as the region's more than 238M SF of office stock has seen vacancy rise to 19% as of the third quarter, according to Avison Young.

As of the third quarter, Atlanta companies were looking to sublease 6.7M SF, according to Savills, nearly 18% of which comes from tech companies. Some of the biggest firms looking to sublease their space include IBM, which is offering 193K SF at 6301-6303 Barfield Road; Secureworks Corp., which is offering 116K SF at 1 Concourse Parkway; and Yardi Systems, which is attempting to sublease more than 90K SF at 500 Colonial Center Parkway in Roswell, according to Savills.

Midtown — which has been the nexus of the growth in technology jobs over the past decade — is experiencing a surge in sublease activity as well. More than 800K SF of office is being offered by companies, or 15% of the total sublease available in Metro Atlanta, according to data from CBRE.

In Midtown, fintech firm FIS has listed 65K SF of its space at 201 17th St. in Atlantic Station for sublease. Patientco, acquired by Waystar last year, is subletting 31K SF at 715 Peachtree St., Samsara is offloading nearly 72K SF at The Proscenium, and New Relic is subleasing 26,500 at Eleven Hundred Peachtree Street.

Samsara and Waystar confirmed to Bisnow their sublease listings, but said they were unrelated to staffing cuts. A Waystar spokesperson said the firm hired more employees than initially anticipated in Atlanta, but that it was looking to sublease the unused portions of its office space. A Samsara spokesperson said flex options are reducing its office needs.

“Since COVID we’ve adopted a flexible workplace model that allows employees to work from home or from the office. As a result, we’re looking to right-size our current space to accurately reflect the number of employees who choose to go into the office,” Samsara spokesperson Adam Simons said in an email. “We have no plans to leave this geography, or any others, and expect all services to continue as normal for the foreseeable future.”

FanDuel — which announced plans last year to open a $15M tech campus at Ponce City Market — also is seeking to sublease 15,600 SF of its 63K SF footprint there as the company strives to hit hiring milestones, spokesperson Chris Jones told Bisnow via email.

The company has vowed to hire more than 900 people in Metro Atlanta by 2026. Jones said the firm already employs more than 300 people at Ponce City Market.

"It was always FanDuel’s plan to sublease the space we have within Ponce City Market as we grew from zero employees in the city. In fact, we’re only entertaining shorter-term sublease agreements because we do plan to transition the space back for full usage by FanDuel in the future as we hit the hiring milestones," Jones said. "We also took on the lease pre-pandemic before we implemented a flexible workplace strategy model, so in addition to being ahead in the hiring timeline, we also occupy space much more efficiently."

Metro Atlanta has been a beneficiary of the corporate migration that saw companies from higher-cost and high-tax markets on the West Coast and Northeast gravitate toward the Sun Belt. Georgia added 204,500 jobs year-over-year as of October, according to the Bureau of Labor Statistics, and has an unemployment rate of 2.9%.

Atlanta may be insulated from staffing cuts overall because of its diverse workforce, said John Boyd, the principal of corporate site selection consulting firm The Boyd Co.

ESG is a major site selection factor today, and the tech industry is especially sensitive to ESG and social impact,” Boyd said. “Atlanta brings a broad platform related to diversity. That’s always been part of Atlanta’s economic development brand.”

Butler, Georgia's labor commissioner, said local tech workers who do get laid off are having little trouble finding employment again. Companies are listing 155,000 job openings with the state labor department, while before the pandemic, the state rarely fielded more than 80,000 job listings, Butler said. So any job cuts in the tech industry could be a blessing in disguise to help ease the labor shortage the industry is facing here overall, Butler said.

"There's a lot of really high-paying jobs," he said. "We're way beyond recovery. We're in rapid growth."