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Facebook parent company Meta has hit the pause button on the fit-out of its mammoth Fibonacci Square development in Dublin amid signs of a global tech slowdown and retrenchment of office space.
The U.S. tech giant, which owns both Facebook and Instagram, has taken a 25-year pre-let on two 360K SF office blocks being developed by Johnny Ronan on the site of the former AIB Bankcentre. Meta has agreed an annual rent of €22.5M on the development.
The tech giant had earmarked the Fibonacci scheme to be the fourth phase of its new European HQ campus. However, a lease on the scheme was signed in 2018 prior to the coronavirus pandemic and the war in Ukraine, which have created turmoil in the global economy in recent months.
Meta has told contractors to pause the fit-out of the scheme, implying its plans to move in are on hold, according to the Irish Times. Ronan Group Real Estate had placed the scheme on the market as part of a $1.3B sale of three properties in March.
Global tech firms have been assessing the office space requirements in recent months, as share prices drop and they embrace a hybrid working model.
Salesforce is giving up 350K SF at its HQ in downtown San Francisco. The tower at 50 Fremont Street was purchased by Salesforce in 2015 for $637M; however, up to 40% of the space will now be sublet.
Twitter Inc. is also pulling back from its office commitments around the world.
The social media company is planning to vacate an office on 10th Street in San Francisco located behind its main headquarters, Bloomberg reported, citing a letter sent to employees Wednesday.
That occurred even as it renewed and expanded its Market Square headquarters, leasing the sixth floor of 1355 Market St. in a deal announced earlier this year. The headquarters is the largest space in Twitter's 1.7M SF global office portfolio.
In addition to the San Francisco closure, Twitter is also cancelling plans to open a 66K SF office in Oakland and is planning to reduce its footprint in several other cities, according to Bloomberg.
In the first six months of 2022 the Nasdaq fell by almost 25%, while the S&P 500 was down by around 16%.
The Irish office market could see a slowdown in take-up if U.S. tech firms decide to pause their global expansion requirements.
Any slowdown in the U.S. economy can have a direct impact on Ireland, and particularly Dublin’s office market. Ireland was the top choice for U.S. tech firms last year, and recent data from JLL Europe showed that tech firms led the way in helping Dublin to its highest leasing activity since the pandemic, snapping up more than 30% of space across five deals in the second quarter of 2022.
The Facebook deal was the largest single office letting in Irish history at the time. The overall campus when completed is set to become the second-largest Facebook campus globally, behind only its California HQ. The campus would have totalled 870K SF across all its sites, which would have hosted up to 7,000 staff.
A spokesman from Meta told the Irish Times that it was committed to Ireland and looked “forward to completing the next phases of the Dublin Ballsbridge campus” without revealing any timeline.
“While our campuses and offices will always be important to us, we regularly re-evaluate our real estate requirements for a distributed-first workforce [one that may work from home or at office].”
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