Meta Scales Back on New York Office Space Amid Belt-Tightening
It reportedly won't renew a lease on some office space in Manhattan's Hudson Yards.
Meta is scaling back its office space in New York City, Bloomberg reported Wednesday, saying the company has decided not to renew its lease on office space in two towers in Manhattan's Hudson Yards. The news comes as Meta continues cost-reduction efforts -- earlier this month, it cut 11,000 jobs, or 13% of its workforce, and it's also initiated a hiring freeze.
In 2019, Meta agreed to rent more than 1.5 million square feet of space across three Hudson Yards towers: 30, 50 and 55 Hudson Yards, Bloomberg reported. The company has opted not to renew its lease on office space at the 30 and 55 addresses, the news service said, citing unnamed sources and adding that the lease involves over 250,000 square feet and expires in 2024. In July, Meta halted further build-out of offices at 50 Hudson Yards as it reconsidered its New York real estate, and it's now subleasing a small amount of space in that tower, Bloomberg said.
After the COVID pandemic prompted a move to remote work, businesses have had to switch gears and reconsider the role of the office. Meta spokesperson Tracy Clayton confirmed that the company is subleasing a portion of 50 Hudson Yards and said Meta is working on creating "the workplace of the future."
"The past few years have brought new possibilities around the role of the office, and we are prioritizing making focused, balanced investments to support our most strategic long-term priorities," she said in a statement. "We remain firmly committed to New York City as evidenced by the recent opening of the Farley building, and 50 Hudson Yards, which is estimated to open next year, further anchoring our local footprint." Meta's New York space includes about 730,000 square feet at the redeveloped Farley Building, Bloomberg noted.
Meta didn't immediately respond to a request for comment on the lease renewal regarding 30 and 55 Hudson Yards.
The company expects to lose about $2 billion on office consolidation, according to Bloomberg, which cited Meta's third-quarter earnings call.
In early November, Meta laid off more than 11,000 employees, or about 13 percent of its workforce. This follows weekend reports that Facebook's parent company was preparing for mass layoffs.
The social networking giant currently employs about 87,000 people, and Wednesday's layoffs represent the first large-scale workforce reduction in the company's 18-year history. Social media rival Twitter was hit with layoffs last week under new owner Elon Musk, with around half of its 7,500 workers losing their jobs.
In a letter to employees, CEO Mark Zuckerberg said the company is reducing its budget, cutting back on real estate and extending its hiring freeze until March.
He blamed the cuts on the company's rapid growth during the pandemic, when increased online commerce resulted in revenue growth. He had believed this would continue and increased the company's spending.
"Unfortunately, this did not play out the way I expected," he wrote. "Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I'd expected."
In July, Meta reported its first-ever revenue drop and revealed disappointing third-quarter results last month as ad sales shrank. Meta's traditional social media business has faced fierce competition in the form of short-form video app TikTok.
The company's financial problems also follow Zuckerberg's attempt to shift toward a new business: building the metaverse, a virtual world where Zuckerberg believes people will connect with others. In October 2021, the Facebook renamed itself Meta to reflect this.