Google, TikTok Among Tech Firms Looking For Big Offices In NYC
Technology companies have stepped back leasing in the Manhattan office market, but there are still companies on the hunt for space — at least for now.
Google is in the market for a 500K SF office as of the second quarter of this year, according to a Savills tech tenant report this week. MongoDB is actively seeking 300K SF, and Oracle is looking for 200K SF, according to the brokerage.
While these large requirements could be massive windfalls for some New York City office owners, tech firms are shifting their approach to their workplaces rapidly, and those requirements could change at any time, Savills Northeast Regional Research Director Marisha Clinton told Bisnow.
"Companies change their requirements all the time based on anything that's happening in the economy, anything that they decide upon based on their return-to-office policies,” she said. “Things can change on a daily, weekly basis."
TikTok, the fast-growing social media platform that signed a 232K SF lease for its U.S. headquarters in Times Square in 2020, is on the hunt for another 100K SF, Savills said. Swedish fintech firm Klarna is also looking for a roughly 100K SF space.
Tech became the darling of the real estate market in the last decade, fueling billions of dollars in office construction in New York City alone, but the industry is at the forefront of allowing employees to work from home.
That approach has been felt in the office leasing market. Tech leasing volume fell for the third straight quarter to almost half its pre-pandemic peak, according to Savills' report. Of the 8.2M SF of Manhattan office leases signed in the quarter, tech, advertising, media and information tenants' share was 18.7%, down from 36% of activity in the last quarter of 2019.
There was 20.8M SF of sublease office space available in Manhattan in Q2; since the onset of the pandemic, TAMI tenants have accounted for 38.7% of the sublease space added to the market, Savills said.
WarnerMedia Group, for example, is looking to offload 452K SF at 30 Hudson Yards, while Buzzfeed is trying to find a subtenant for 100K SF at 225 Park Ave. S. Peloton has listed 100K SF at 441 Ninth Ave., Bisnow first reported.
"The overall share of TAMI leasing is declining. But I always say there are other sectors out there from an industry standpoint that are picking up the slack,” Clinton said. “Tech does have a greater opportunity to work remotely, whereas financial services may not.”
There has been a slew of major changes in the sector. This week, Twitter told employees it was pulling back from its office commitments around the world, including plans to reduce space in New York, where it expanded to 215K SF at 249 West 17th St. in 2018.
Nationally, Amazon is pausing construction on six of its planned office towers and in New York reduced the amount of space it had planned to sublease from JPMorgan Chase at Five Manhattan West, Bloomberg reported this month.
Meanwhile, Facebook has pulled out of another 300K SF it planned to lease at 770 Broadway in New York and halted its build-out in Hudson Yards while it assesses how it wants to use its office space going forward, per Bloomberg.
Major tech leases during the quarter included Datadog's renewal and expansion for 350K SF at 620 Eighth Ave., Global Relay's lease for 77K SF at 1155 Sixth Ave. and Apple's expansion to just under 60K SF at 11 Penn Plaza, according to Savills.
"The companies, they lay out their requirements, but their internal management teams have the right to come up with their own return-to-office policies,” Clinton said. "The jury's still out as to whether or not companies will actually significantly alter their square footage, and return-to-office policies are driving the majority of those decisions.”