Meta, Amazon Moves May Signal Slowdown in Big Tech’s Run on NYC Office Space


Meta and Amazon (AMZN)’s July announcements that each tech tycoon would slow its expansion plans in New York City were, together, the shot heard ‘round commercial real estate. 

The two firms signed some of the biggest office leases in New York City during the first year of the pandemic, underscoring the office market’s rising dependency on tech tenants. Their newest moves, though, might herald an end to the tech sector’s meteoric rise, or at least a slowdown.

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Tech was central to the city’s economy during the first two years of the pandemic. Facebook — which later changed its name to Meta — took 730,000 square feet in Vornado Realty Trust’s Farley Post Office building project in August 2020 in what became the largest office deal of the year. Just a few months prior, Amazon announced it had spent $1.15 billion on Lord & Taylor’s former 630,000-square-foot flagship building on Fifth Avenue for a 2,000-person office. 

And New York City’s jobs, not just leasing, were driven by tech companies. The number of tech industry jobs grew by 8.7 percent while the rest of the city’s employment shrunk through 2020 and 2021.

Both jobs and leasing might be drying up. 

Meta decided against expanding its office space by another 300,000 square feet at 770 Broadway, which would have brought the company’s footprint to nearly 1 million square feet at the building, Bloomberg reported. The company is also reportedly pausing its plans to build out its new offices in Hudson Yards. Nearby, Amazon retreated from a planned sublease agreement with JPMorgan Chase at 5 Manhattan West in Hudson Yards for an undisclosed amount of space, according to Bloomberg. (Meta, Amazon and Vornado did not respond to requests for comment. JPMorgan Chase declined to comment.)

Meta announced a hiring freeze for certain roles at the company in May, followed by Google, Lyft, Spotify, Twitter and Snap Inc. In June, Netflix announced it would lay off 300 employees, Coinbase said it would cut 18 percent of its staff and New York-based tech company UiPath planned to cut five percent of its total workforce

Also, it’s not just New York losing out on leasing — Amazon has pulled back nationally in both its office and industrial footprint. The e-commerce giant announced it would pause the construction of 4 million square feet of office space across five towers in Bellevue, Wash., and one in Nashville, Tenn., while it reevaluates its office needs. In May, Amazon was looking to put roughly 5 percent of the warehouse space it added during the pandemic — about 10 million square feet — back on the market in New York, New Jersey and California. (Netflix also has plans to put about 180,000 square feet of its Burbank media hub up for sublease.)

In one way, Amazon and Meta’s moves aren’t shocking. Both companies expanded during the pandemic and have a significant office footprint in New York. Of course these firms, like others in tech and other fields, are reevaluating space requirements while determining what model of remote, hybrid or in-person work they will use going forward, according to Marisha Clinton, senior director of Northeast regional research for Savills.

“They are still all trying to figure it out. If you were a company, would you not move forward with your expansion plans?” Clinton asked. “At the end of the day, what they are doing is not out of the ordinary.”

While it’s easy to point the finger at remote work, the central problem is uncertainty, Zev Holzman, a broker at Savills who has worked with tech and financial services tenants, said. Companies like Amazon and Meta are still figuring out the role the office will play in their businesses — and probably aren’t going to keep extra fat lying around in the meantime. 

“It’s definitely not immaterial but it’s not that shocking either,” Holzman said. “I think that it’s reflective of the uncertainty in terms of the future of work, and I think they are taking a pause like others are to see what that future looks like … It’s certainly a notable data point, but I don’t know if it’s necessarily a harbinger of the market overall.” 

Tech office leasing in New York City, however, has fallen relative to other industries. The portion of the total number of square feet leased to technology, advertising, media and information (TAMI) tenants declined the past three consecutive quarters, from a high in fourth quarter 2021 of 31 percent to 18.7 percent in the second quarter of this year, according to data from Savills. TAMI tenants took a whopping 2.9 million square feet of New York City’s office space in the fourth quarter of last year, with that amount dropping by half in the first and second quarters of 2022 to about 1.5 million square feet each.

Tech companies may need to offer flexible working arrangements to attract talent, Jason Clark, the executive director of the technology company network Tech:NYC, said. But he was confident that tech companies would continue to commit to office space, he added.

“Each company is going to make whatever decision they think is best for their employees and their business, but I do see office space as continuing to be an important part of the business model for our city,” Clark said.

That office space might be getting smaller, at least for big office users. Out of the tenants that occupy at least 50,000 square feet in New York City, 47 percent took more space during a new lease or lease renewal in the second quarter of 2022 compared with 71.4 doing so in the same quarter a year ago, according to data from Savills. The percentage of tenants taking less space stayed mostly the same, at between 21 and 23 percent, year over year, but rose from 3.8 percent in the first quarter to 23 percent in the second quarter of 2022. 

Still, more tenants stayed in the same sized space or grew in the second quarter, Clinton said. She was optimistic about the office market, especially with the growing leasing by financial services tenants. Financial services companies have steadily increased the amount of square footage leased in the past year and a half, rising from 1 million square feet in the second quarter of last year to 3.45 million square feet in the second quarter of 2022, according to data from Savills.

New York has been prone to extremes throughout the pandemic, said Mark Ein, chairman of Kastle Systems, an office security firm that collects data on office occupancy. The city had the lowest office occupancy of any major U.S. market when the pandemic began, but also had the biggest increase relative to the national average in the last few months, according to Ein. Office occupancy in New York City will probably never be the same as it was before the pandemic, but Ein believes that it will continue to rise.

Celia Young can be reached at