By Kate Snyder
As tech companies look to decrease their office footprints, Google’s parent company, Alphabet, Inc., announced that it anticipates absorbing about half a billion dollars in exit costs related to the firm’s planned office space reductions in the first quarter of 2023, according to its recently released fourth quarter earnings report.
“We are taking actions to optimize our global office space,” the report states. “As a result we expect to incur exit costs relating to office space reductions of approximately $0.5 billion in the first quarter of 2023. We may incur additional charges in the future as we further evaluate our real estate needs.”
Google’s announcement is part of an ongoing trend among major tech companies that are dropping office space – a trend believed to be directly related to the rise of remote work and subsequent underutilization of office properties since the start of the COVID-19 pandemic.
Late last year, Meta announced that on top of a considerable slowdown in hiring, the firm is also expected to spend around $2 billion, or roughly 2 percent of its entire expenses in 2023, in order to consolidate its office facilities across the globe.
“We have increased scrutiny on all areas of operating expenses. However, these moves follow a substantial investment cycle so they will take time to play out in terms of our overall expense trajectory,” said Dave Wehner, Meta’s chief financial officer during the firm’s third quarter earnings call in October 2022. “Some steps, like the ongoing rationalization of our office footprint, will lead to incremental costs in the near term. This should set us up well for future years, when we expect to return to higher rates of revenue growth.”
In a recent earnings report from Microsoft, the firm also highlighted decisions to consolidate office space, though no cost estimate related to the consolidation plan was included in the report. Microsoft had previously announced its intention to let go of approximately 1.7 million square feet.
Amazon is another tech giant that has been making moves to get rid of its office space by either not renewing leases or placing large swaths of space on the sublease market. In Seattle, Amazon is specifically looking to shed the roughly 370,000 square feet it occupies in the Kilroy Realty-owned 28-story West 8th Tower located on Eight Avenue.