"Meta, Lyft, Salesforce and Other Tech Firms Dump Office Space as They Downsize" (WSJ article). Thoughts?
Some notes:

* Technology companies, which had been a boon to office demand, are canceling leases and placing space in the sublease market.
* Office leasing declined during the pandemic, but technology tenants represented the preponderance (\~21%) of the space that was leased during that time. In fact, according to the article, Google *increased* their leasing during that period.
* Technology companies need less office space as they anticipate a recession and have announced meaningful layoffs.
* Technology companies have placed 30 million in square feet of office space in sublease markets, that figure was 9.5 million when measured at Q4'19.
* The current office vacancy rate is 12.5% and the highest level since 2011, according to CoStar data.
* \~20% ($1.2 trillion) of the current stock of CRE debt ($5.4 trillion) was backed by office properties. Only multifamily (apartments) properties are financed with more debt. LTV levels were not mentioned in the article.
* Facebook/Meta will sublease, not occupy, any of the office space it committed to for "Sixth and Guadalupe," which will be Austin's tallest tower when it is completed in 2023. Meta was the anchor office tenant for the mixed-use building.

The article ends with someone prognosticating that layoffs, not all-remote working arrangements, will continue to attenuate office space demand by technology companies.

A version of the article can be read [here](https://archive.ph/pjLec).
[{"id": "iwl189n", "text": "Tech is getting pummeled and there's really no end in sight right now. These companies made huge investments the last couple years, some far too quickly. \n\nCombine this with a rise in remote work, yeah that's gonna hurt the office market, lol. \n\nI think the office brokerage world will see some good sized reductions in not only transaction volume but also broker head counts. Similar to what we saw in the retail world in 2016 - 2018.", "replies": [{"id": "iwliyz0", "text": "Lot of those offices are going to get scraped for another use. Some might get converted to resi, but that\u2019s really tough to do.", "replies": [{"id": "iwlv45p", "text": "There's been lots of debate about office conversion over the year in r/urbanplanning But those guys don't know anything about real estate functionality or capx intensive a conversion is.  The planners live in some SimCity textbook theoretical utopia doused with marxist dribble.  Phoenix, Vegas, and pockets of Denver lumbered along for over a decade with 20% vacancy. The breakeven point is nearly 30% vacancy.  Values have to fall nearly to shell so conversion will occur in heavily depreciated office buildings.", "replies": [{"id": "iwlv5jk", "text": "Here's a sneak peek of /r/urbanplanning using the [top posts](https://np.reddit.com/r/urbanplanning/top/?sort=top&amp;t=year) of the year!\n\n\\#1: [Three in four Americans believe it's better for the environment if houses are built further apart](https://today.yougov.com/topics/politics/articles-reports/2022/04/13/high-density-worse-environment-traffic-and-crime) | [212 comments](https://np.reddit.com/r/urbanplanning/comments/u2x88d/three_in_four_americans_believe_its_better_for/)  \n\\#2: [Musk admitted Hyperloop was about getting legislators to cancel plans for high-speed rail in California. He had no plans to build it](https://twitter.com/alexdemling/status/1557221632837505025?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1557221632837505025%7Ctwgr%5E%7Ctwcon%5Es1_&amp;ref_url=) | [128 comments](https://np.reddit.com/r/urbanplanning/comments/wlsdlo/musk_admitted_hyperloop_was_about_getting/)  \n\\#3: [Barcelona's plans to further pacify streets by next year (before/after)](https://www.reddit.com/gallery/spvobm) | [74 comments](https://np.reddit.com/r/urbanplanning/comments/spxjwu/barcelonas_plans_to_further_pacify_streets_by/)\n\n----\n^^I'm ^^a ^^bot, ^^beep ^^boop ^^| ^^Downvote ^^to ^^remove ^^| ^^[Contact](https://www.reddit.com/message/compose/?to=sneakpeekbot) ^^| ^^[Info](https://np.reddit.com/r/sneakpeekbot/) ^^| ^^[Opt-out](https://np.reddit.com/r/sneakpeekbot/comments/o8wk1r/blacklist_ix/) ^^| ^^[GitHub](https://github.com/ghnr/sneakpeekbot)", "replies": [], "depth": 4}, {"id": "iwlvqof", "text": "It's not just the vacancy and cost, but also floor plates.  Smaller floor plates in older buildings are much more easily converted than modern buildings with massive floor plates and central elevators.  \n\nThere's often no good way to convert a big floor plate because so much of the unit would have no exposure to natural light.  \n\nI've looked at them a number of times and almost always the answer is that there's no value to the existing improvements--or negative value, intrinsic value aside--because of the cost of conversion.", "replies": [{"id": "iwm75fa", "text": "Agreed. Life Sciences would be a better avenue for conversion, assuming in an area with such demand.", "replies": [{"id": "iwnu9o9", "text": "About that....\n\nhttps://www.bostonglobe.com/2022/11/15/business/bostons-lab-boom-is-hitting-brakes/", "replies": [{"id": "iwo7qho", "text": "I can't access the article, but assuming the brakes are being hit on new construction that would be an even better reason to look at an existing building conversion if you have access to the right money.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}, {"id": "iwmlwwv", "text": "Completely agree about the functionality floor plate issue. There is nothing salvageable in an office structure but the skeleton.  HVAC, no. Lighting, no.  Acoustic ceiling, no. Plumbing, no.  Flooring, no.  Curtainwall, maybe.\n\nIt's a question of absorption keeping landlords heads above water.  *PwC* Q3 going-in national suburban office caps averages 6.65%, up only 35 BP from last year, but down from 5 years ago at 7.42%. Rents up 2.2% in Q3.  Downtown office is similar.", "replies": [], "depth": 5}], "depth": 4}, {"id": "iwq8j0n", "text": "Urban Planners are like economists, they live in theory.  That's why its good to pair them with seasoned commercial real estate professionals to get a better assessment of the potential future.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iwlkmio", "text": "I've spoken with a lot of decision makers over office use for various companies lately. Consensus is that foot fall traffic in almost all offices is still below 40% of normal at best. Despite the big talk from some companies about pushing people back to the office, most execs seem to realize they will lose access to employee candidates by making that policy choice. Everyone is looking at rationalizing their office space right now with flex work and desk hotelling becoming the norm. \n\nI am very bearish on office at this point in time. We will likely see a gradual and unstoppable increase in office vacancy rates as leases roll over and companies trim the fat of their square footages. \n\nThe only way for all the unused space to get filled would be for a lot of new office centric businesses appear to fill the space which doesn't seem likely. Either that or old product gets redeveloped for other uses so total office space declines as a proportion of the total real estate market.  \n\nEither way, this process could take a generation to play out. Wouldn't want to be an office landlord right now, that's for sure.", "replies": [], "depth": 1}, {"id": "iwllwl4", "text": "Just a reminder that CoStar vacancy is empty office space available for lease. Does not include sublease space, not reflect unused space.\n\nThis will continue to change as leases come up and the foot traffic/occupancy is still 40-60% in many tech markets.", "replies": [], "depth": 1}, {"id": "iwmhkyk", "text": "Not just tech I would add. Large law firms are also reducing their overall office footprint.", "replies": [], "depth": 1}]