Alphabet Freezes Hiring, CRE Investment Could Be Next
During the company's third-quarter earnings call, Chief Financial Officer Ruth Porat said full plans to slow hiring will be made clearer in 2023, but the pullback is already underway.
Porat said that employment growth in Q4 will be less than half what it was in the previous quarter, though Q3 was an outsized one for hiring at the company, with nearly 13,000 new employees joining the Alphabet ranks, CoStar reports.
Alphabet said it is looking to “redeploy investments for our most compelling opportunities,” and Porat added that it would focus capital on improving infrastructure, such as data centers.
The company outlined plans for new offices and data centers on a countrywide basis earlier this year, along with expectations that it would create over 12,000 new jobs by the end of the year, with real estate investments expected to hit $9.5B in 2022, CNBC reported in April.
That announcement came before a series of interest rate hikes and persistent inflation began ringing recession bells for the U.S. economy.
Tech companies and their growth have accounted for a big chunk of office leasing nationwide in the last decade, according to CBRE data released earlier this year. In 2021, tech companies were responsible for 36 of the 100 largest leases, totaling 11.4M SF.
Another tech giant, Facebook parent company Meta, pulled back on its footprint in the last month, exercising options to vacate leases in Manhattan and Silicon Valley.
Layoffs have increased since the spring across the tech industry, along with reductions in real estate. Several high-profile tech companies such as Coinbase and PayPal have instituted layoffs this year in San Francisco, which has become a microcosm of return-to-office struggles.