Tech companies once fueled New York's economy. Now they are reducing.
For much of the past two decades, including during the pandemic, tech companies have been a bright spot in New York's economy, creating thousands of well-paying jobs and spanning millions of square feet of office space.
Their growth has boosted tax revenue, made New York City a credible regional rival of San Francisco Bay Area and provided jobs that helped the city absorb layoffs in other industries during the pandemic and financial crisis of 2008.
Now , the tech industry is retreating hard, clouding the city's economic future.
Faced with numerous business challenges, major tech companies have laid off more than 386,000 workers worldwide since early 2022, according to layoffs.fyi, which tracks the tech industry. And they pulled out of millions of square feet of office space because of these job cuts and the shift to working from home.
That pullout hurt to many tech hubs, and San Francisco was the hardest hit with a 25.6% office vacancy rate, according to Newmark Research.
New York is doing better than San Francisco — Manhattan has a vacancy rate of 13.5% — but it can no longer rely on the tech industry for its growth. According to Newmark, more than a third of the approximately 22 million square feet of office space available for sublease in Manhattan comes from technology, advertising and media companies.
Consider Meta, which owns Facebook and Instagram. It is now dumping much of the more than 2.2 million square feet of office space it has gobbled up in Manhattan in recent years after laying off about 1,700 employees this year, a quarter of its workforce. works in New York State. The company has elected not to renew leases covering 250,000 square feet at Hudson Yards and for 200,000 square feet on Park Avenue South.
Spotify is attempting to sublet five of the 16 floors it rented six years ago at 4 World Trade Center, and Roku is offering a quarter of the 240,000 square feet it took in Times Square last year. Twitter, Microsoft and other tech companies are also trying to sublet unwanted space.
"Tech companies have been such a huge part of the real estate landscape in five years," said Ruth Colp-Haber, managing director of Wharton Property Advisors, a real estate brokerage firm. "And now that they seem to be shrinking, the question is, who's going to replace them?"
>Ms. Colp-Haber said it could take months for larger spaces or entire floors of buildings to be sublet. subletting also lowers the rents that landlords can get on new leases.
"They're going to undercut all landlords in terms of price, and they have very beautiful spaces that are all already built,” she said, referring to tech companies.
The tech sector has been a driver of the economy of New York since the dot-com boom of the late 90s has helped establish "Silicon Alley" south of Midtown. Then, after the financial crisis, the expansion of companies like Google supported the economy when banks, insurers and other financial firms were shrinking.
For much of the past two decades, including during the pandemic, tech companies have been a bright spot in New York's economy, creating thousands of well-paying jobs and spanning millions of square feet of office space.
Their growth has boosted tax revenue, made New York City a credible regional rival of San Francisco Bay Area and provided jobs that helped the city absorb layoffs in other industries during the pandemic and financial crisis of 2008.
Now , the tech industry is retreating hard, clouding the city's economic future.
Faced with numerous business challenges, major tech companies have laid off more than 386,000 workers worldwide since early 2022, according to layoffs.fyi, which tracks the tech industry. And they pulled out of millions of square feet of office space because of these job cuts and the shift to working from home.
That pullout hurt to many tech hubs, and San Francisco was the hardest hit with a 25.6% office vacancy rate, according to Newmark Research.
New York is doing better than San Francisco — Manhattan has a vacancy rate of 13.5% — but it can no longer rely on the tech industry for its growth. According to Newmark, more than a third of the approximately 22 million square feet of office space available for sublease in Manhattan comes from technology, advertising and media companies.
Consider Meta, which owns Facebook and Instagram. It is now dumping much of the more than 2.2 million square feet of office space it has gobbled up in Manhattan in recent years after laying off about 1,700 employees this year, a quarter of its workforce. works in New York State. The company has elected not to renew leases covering 250,000 square feet at Hudson Yards and for 200,000 square feet on Park Avenue South.
Spotify is attempting to sublet five of the 16 floors it rented six years ago at 4 World Trade Center, and Roku is offering a quarter of the 240,000 square feet it took in Times Square last year. Twitter, Microsoft and other tech companies are also trying to sublet unwanted space.
"Tech companies have been such a huge part of the real estate landscape in five years," said Ruth Colp-Haber, managing director of Wharton Property Advisors, a real estate brokerage firm. "And now that they seem to be shrinking, the question is, who's going to replace them?"
>Ms. Colp-Haber said it could take months for larger spaces or entire floors of buildings to be sublet. subletting also lowers the rents that landlords can get on new leases.
"They're going to undercut all landlords in terms of price, and they have very beautiful spaces that are all already built,” she said, referring to tech companies.
The tech sector has been a driver of the economy of New York since the dot-com boom of the late 90s has helped establish "Silicon Alley" south of Midtown. Then, after the financial crisis, the expansion of companies like Google supported the economy when banks, insurers and other financial firms were shrinking.
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