What’s going on:
Alphabet, parent company of Google, has disclosed that it will incur around $500 million in the first quarter of the year on expenses related to its global office space — a sum that doesn’t yet account for how much space it will be relinquishing.
Why it matters:
The tech industry’s diminishing need for office space may prove to be a major setback for the already weakened office market, given that its expansion has been a major contributor to overall U.S. office leasing in the past decade, according to CBRE data.
This decrease in personnel has come as a surprise, as Google had recently planned to invest almost $9.5 billion in U.S. offices and data centers for 2022, a dramatic increase from the previous year’s $7 billion.
How it’ll impact the future:
In the Securities and Exchange Commission filing, Alphabet hinted that further decreases in office space utilization could be on the horizon — whilst simultaneously pledging to invest more heavily in their technical infrastructure, according to Chief Financial Officer Ruth Porat.
