Meta spends $181M to get out of lease at vacant London offices
Biz signed 20-year term in 2021 before COVID-19 caused the WFH revolution followed by redundancies
Meta is paying £149 million ($181 million) to release itself earlier than planned from a lease on an eight-story office block in London signed two years ago, which still lies vacant.
The antisocial media biz took out a 20-year lease on 1 Triton Square near Regent's Park in the north-west of England's capital in 2021, something that supposedly showed Brexit Britain was open for business.
The decision at the time came well before the industry-wide downturn in digital ad spending that caught out Meta and Google, and was during a glorious hiring frenzy that saw Meta’s headcount rise from 58,000+ in 2019 to more than 87,000 by the end of Q3 2022.
CEO Mark Zuckerberg subsequently went into cost-cutting overdrive, announcing 11,000 redundancies, or 13 percent of the workforce, in November last year, and another 10,000 people got the chop in March. This was all part of Zuck's so-called "Year of Efficiency."
Clearly paying millions to rent a 310,000 square-foot office space that wasn't being used isn't fiscally prudent, especially when Meta hadn’t furnished the block, let alone occupied it. The company has now paid the equivalent of around seven years rent to exit the lease, according to an update from British Land.
In a statement, Meta said: "The past few years have brought new possibilities around the role of the office, and we are prioritising making focused, balanced investments to support out most strategic long-term priorities and lead the way in creating the workplace of the future."
"We remain fully committed to London, as evident by the recent opening of our King’s Cross office further anchoring our local footprint."
Meta has mandated employees' return to the office for three days a week, telling them they "work better" when together in person. Zoom said the same, ironically given its position as a web conferencing provider, when opening its own London office recently.
Others including Dell, Google, IBM, and many more are also calling staff back to the corporate water coolers. Meta is now using employee badges to track if staff are working from an office for the requisite three days a week.
A study published by the US National Bureau of Economic Research in October 2022 indicated that remote work stateside had wiped a staggering $453 billion off the value of office real estate. This week, estate brokerage CBRE reportedly estimated that nearly 30 million square feet of office space was vacant in the city of San Francisco, equating to 33.9 percent being unused.
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According to research by Omdia, 57 percent of HR and IT people quizzed said they are "satisfied" with the diversification of workplaces and others are "less satisfied at work when a return to the office is mandated."
Staff want to feel trusted yet managers want to see their staff in the office to know the work they assigned is being done – a difficulty posed by so-called productivity paranoia.
"More diverse work styles have impacted employee productivity, satisfaction and customer experience," said Adam Hotly, principal analyst at Omdia. ®