Technology sector accounting for more than half of recent sublease additions
January 18, 2023
- Jacob Rowden
- After a period of rapid growth, the tech sector is aggressively cutting costs, with major companies announcing widespread layoffs and the sector contributing to more than half of new sublease additions in Q4.
- Technology layoffs slowed in December, but the sector remains under heightened pressure from a valuation standpoint than more countercyclical industries, and sublease additions are expected to remain elevated in the first half of the year.
- At higher rates than during the height of the pandemic, tenants are backfilling sublease space and taking advantage of discounted rates on pre-built spaces – the largest office lease of the third quarter was Tik Tok parent company ByteDance subleasing nearly 700,000 s.f. of Verizon sublease space in Silicon Valley, and in the fourth quarter an additional 44 subleases over 25,000 s.f. were executed nationally.
- Despite recent give-backs and layoffs, most technology companies have still expanded both office portfolios and employee headcounts since the outset of the pandemic: the largest 25 technology tenants in the U.S. collectively own or lease 10% more office space than they did at the end of 2019, even with recent sublease additions.