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Tech Industry

Akamai, Red Hat seek cheaper lodging

Akamai breaks its Cambridge, Mass., lease to save up to $10 million a year. In North Carolina, budget considerations also have Red Hat on the move.

The decline of the tech economy has taken a toll on Silicon Valley's real estate market, and now there are signs that it is hitting other technology hubs as well.

Akamai Technologies announced Wednesday that it is breaking its lease in the Technology Square office park in Cambridge, Mass. The company said the move could save it $8 million to $10 million a year starting in 2003.

Earlier this week, Red Hat said that it is moving its headquarters from Durham, N.C., to nearby Raleigh to save $700,000 in real estate costs.

As companies look to tighten belts and cut costs, moving trucks are becoming almost as common as Aeron chairs in some high-tech centers. Although being in a tech hub can provide cachet as well as an opportunity to network, the cash saved by reducing leases has become more critical to some businesses.

A study from the Federal Deposit Insurance Corp. released Tuesday found that the nation's property markets continued to deteriorate during the second half of 2001. Eighty-one percent of the federal bank and thrift executives surveyed said that real estate markets had excess supply, up from 64 percent in the previous survey. Among the cities listed with excess office space were notable high-tech hubs including Austin, Texas; Boston; Raleigh; San Francisco; San Jose; and Seattle.

"We saw an excellent opportunity to relocate and significantly lower our operating costs," Akamai President Paul Sagan said in a release. "We intend to take advantage of today's lower commercial lease rates to reduce operating expenses."

Sagan said the company would announce its new headquarters location within the next 90 days. Akamai will pay a $15 million one-time termination fee to the landlord, the Massachusetts Institute of Technology.