In latest blow to office market, Facebook pauses in new space in Kendall
“The past few years have brought new possibilities for how we connect and work. Like many other companies, we strive to make targeted and balanced investments to support our most strategic long-term priorities given the current economic climate,” said Reeves. “We remain firmly committed to the Boston-Cambridge community.”
As Boston’s once-hot office market has stalled during the pandemic, big tech companies such as Facebook, Amazon, Apple and Google have been among the few blue-chip companies to make a major commitment to new space. Google is nearly done with a new tower in Kendall Square, where Apple is also expanding its local office, while Amazon in January 2021 leased an entire second building in the Seaport, which recently kicked off construction.
But now Facebook is suspending expansion of its offices here and in New York, where Amazon is also pulling out, Bloomberg reported Last week. Amazon also suspended construction of several towers in the Seattle-area city of Bellevue, as well as a second tower in downtown Nashville, according to media reports. In both cities, Amazon said it would take a break to reevaluate office design in a hybrid work world.
In Boston, however, Amazon seems to be staying the course on its real estate plans. In June, the e-commerce giant opened the first of two large offices at the seaport — one of the few new offices built and open since COVID-19 hit the United States — which has about 2,000 people. The second building, at 1 Boston Wharf Road, is set to open in 2024 and could expand the company’s local workforce to 4,500 technical and corporate employees.
Amazon’s Boston growth plans are “unaffected” by construction pauses in Nashville and Seattle, Adam Sedo, an Amazon spokesman, said in an email to The Globe. The company has over 1,300 open positions here.
“Our hiring plans in the city remain unchanged,” Sedo said.
Meta’s construction pause comes at a time when the availability of office space has increased in Greater Boston for the first time in a year, and other major tech companies, including Akamai Technologies and Wayfair, said they intended to sublet some of their existing space — which opened shortly before the pandemic — to other businesses.
And redesigning office spaces for a post-pandemic hybrid workplace has been a priority for many Greater Boston businesses. State Street Corp. modified the layout of its new headquarters under construction in the One Congress office tower to incorporate an unassigned office layout, with four different types of workstations. Across the river in Cambridge, Akamai is subletting four of its 19 floors and reconfiguring the remaining space. Some 95% of Akamai employees can work remotely forever, if they choose.
And when Boston-based software company Immuta looked for new office space during the pandemic, it wanted more space than usual in order to give employees more space to collaborate and make entry on Seaport’s site interesting.
“Before the pandemic, when we were doing real estate surveys, we were probably giving away about 100 square feet per employee,” said Jason McCluskey, director of global workforce and real estate at Immuta. “COVID…kinda moved up to about 200.”
A recent report from real estate firm Colliers indicated that many landlords were concerned that tenants were shrinking their footprints while considering in-person work preferences over hybrid work preferences – which is particularly worrisome for owners of older buildings where vacancy rates are higher. This is prompting many property owners to consider converting their existing empty offices into lab spaces. Until recently, large new buildings in neighborhoods with high demand from the life sciences industry, such as Kendall Square, have held their value.
Indeed, in December, developer Alexandria Real Estate Equities sold a sizable stake in 50-60 Binney St. — the very building where Facebook is currently suspending construction — to Norges Bank and MetLife for $1.2 billion, touting the full rental status of the complex to explain the huge sum.
The length of Meta’s construction hiatus in Boston is unclear. The company has 43 open positions listing in the Boston area, and job postings indicate that many of these positions could be remote. The company has about 500 local employees, based in its existing office across the street at 100 Binney, who have been working largely remotely since the COVID pandemic hit Boston in early 2020.
Anissa Gardizy of Globe staff contributed to this report.