What’s going on:
Google is currently divesting itself of 1.4 million square feet of office space in the Silicon Valley area, according to The Real Deal. The massive tech company listed seven office buildings in the Mountain View and Sunnyvale areas for sublease.
The decision follows Google’s significant layoff announcement in January, where 12,000 employees were let go, including over 1,600 in the San Francisco Bay Area. Prior to the decision, Google incurred $564 million in lease exit costs during the first quarter, and $2 billion in charges related to its layoffs, according to Silicon Valley Business Journal.
Why it matters:
Google is one of the many major tech companies that are downsizing and eyeing alternative work environments — like hybrid and remote work.
The influence of the tech industry on coworking spaces could also reshape the entire commercial real estate market and influence the development of new kinds of office spaces in the future. Where traditional commercial real estate office spaces were once filled, now major labor hubs like San Francisco and New York City are seeing a decline in occupancy.
How it’ll impact the future:
Google’s decision to sublease these commercial office spaces may lead to a change in the way other tech companies approach their real estate investments. The tech industry’s cost cutting is shifting an entire industry by placing investments into flexible and adaptable spaces that cater to a hybrid workforce. Google’s situation is akin to Amazon, which has been securing coworking spaces in the U.K.
