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Software company HubSpot has joined a growing roster of tech companies cutting office space due to difficult economic conditions.
The firm expects to incur between $48M and $74M in financial hits due to its decision to consolidate leases, it said in a filing with the Securities and Exchange Commission on Tuesday.
The cost reduction plan also includes layoffs of 7% of the firm's workforce, or about 500 "HubSpotters," which will add $24M to $31M to the total cost of the firm's reduction plan.
HubSpot didn't disclose which of its offices would be affected. Headquartered in Cambridge, Massachusetts, it also lists U.S. office locations in Portsmouth, New Hampshire, and San Francisco, plus international offices in Toronto, London and elsewhere.
In a memo to staff filed with the SEC, CEO Yamini Rangan cited a "perfect storm" of factors leading to the cost reduction plan, including inflation, a "volatile foreign exchange" and customers tightening their budgets.
"As we all know, the world has shifted constantly over the past few years," Rangan wrote. "Our business boomed throughout the pandemic but in 2022, things took a downward turn. We came into 2022 anticipating growth would slow down from 2021, but we experienced a faster deceleration than we expected."
As recently as November 2021, the firm had been in footprint expansion mode, signing a 205K SF lease expansion and renewal near its listed headquarters in Cambridge's Kendall Square.
HubSpot now joins Intel and SoFi among the firms laying off tech workers just this week, according to Layoffs.FYI. The group joins a beleaguered tenant sector whose leasing volume dropped 57% between the third and fourth quarters of 2022, according to Savills data.
The knock-on effects of the tech layoffs have reached markets around the country, including HubSpot's home in the Boston area. More than a half-dozen tech firms have listed sublease space larger than 50K SF there, Bisnow reported in November.
Tech executives from firms big and small have embraced lease consolidation as part of their cost-cutting strategies over the past few months. On Jan. 18, Microsoft CEO Satya Nadella notified the SEC that his corporation would spend $1.2B as a result of layoffs and returning office space. He told an audience at the World Economic Forum that the tech industry would have to get "more efficient" in this moment of change for the sector.
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