Facebook signs a 730,000 square foot office lease at Farley Building

0
147


  • Facebook has entered into a lease to take all office space in the Farley Building on the west side of Manhattan.
  • The deal means a major vote of confidence in the New York office market at a time when its future has been called into question by the coronavirus pandemic.
  • Last year, the company signed for approximately 1.5 million square feet in three nearby buildings in the Hudson Yards.
  • In a statement, a Facebook spokesperson said the new location will be used to develop the company’s engineering operations in the city.
  • Visit the Business Insider homepage for more stories.

Facebook has entered into a lease to take all of the office space in the Farley Building on the west side of Manhattan in a deal that means a major vote of confidence in the New York office market at a time when its future has been challenged by the coronavirus. pandemic.

Facebook has signed up for 730,000 square feet of newly constructed office space, according to a press release from Vornado Realty Trust and a statement from the tech giant. Space is being set up inside the shell of the more than a century old Farley Building, which for decades had served as the distribution center for the US Post Office.

The deal is the latest in a major expansion of Facebook’s footprint in the city over the past year. Last year, the company signed for approximately 1.5 million square feet in three nearby buildings in the Hudson Yards.

In a statement, a Facebook spokesperson said the new location would be used to expand the engineering business of the $ 720 billion firm in the city, which so far has been based in another large office that Facebook had occupied for several years at 770 Broadway.

“The Farley Building will strengthen our footprint in New York City and create a dedicated hub for our technical and engineering teams,” said the spokesperson. “This significant investment in space will support Facebook’s efforts to evolve our technical and engineering teams. ”

Read more: 20% of WeWork’s New York space is empty. Here’s a look at the key vacancies the city’s largest office tenant is trying to fill.

The Manhattan office market has been hit by the pandemic

The lease is good news for a commercial real estate sector that has been battered by the Covid crisis.

A total of about 8.3 million square feet of office space was leased in Manhattan in the first half of 2020, down 44% from the amount leased in the same period last year, according to the company. of CBRE real estate services. More than 70% of that space was occupied in the first quarter, with transaction activity plummeting in the second quarter, when the pandemic caused lockdowns that shut down commerce and daily life.

The sluggish pace of leasing has raised a difficult question for landlords and real estate executives as to whether tenants will ever return to the office in the same fashion or whether they could instead choose to reduce their footprint by embracing the working from home as a permanent strategy.

Facebook itself appeared to add credit to this approach earlier in the virus crisis when the company’s chief executive, Mark Zuckerberg, said in a public presentation he would allow half of its workforce in the decade to come to work remotely and pursue a more diffuse network of smaller spaces in secondary and tertiary cities to respond to this approach.

The disclosure had suggested that the social media giant might move away from its strategy in recent years of renting large spaces in huge employment centers such as New York City, which have been hot spots for talent.

The Farley Building lease shows that if Facebook can use a work-from-home strategy for part of its employee base, it is unlikely to abandon its focus on large metro campuses.

“It reaffirms the intellectual capital of New York City,” said Brian Waterman, executive vice president of commercial rental and real estate services company Newmark Knight Frank. “It’s just another commitment from the tech segment that shows the city is where they want to be. ”

Other big tech companies have moved into office space during the pandemic. Video sharing service TikTok recently signed up for over 200,000 square feet at 151 West 42nd Street in Times Square. IBM, meanwhile, is actively seeking up to 500,000 square feet of space.

The Farley Building is a sprawling one-block property across from Penn Station, the country’s busiest transit hub, which is being converted by a development team led by Vornado Realty Trust for a double use. Its eastern annex will become a new station for Long Island Railroad and Amtrak, while its western half is being converted into offices. The ground floor of the building will also include 120,000 square feet of retail space.

Facebook will occupy the entire office space of the building, which will be spread over four levels of the property. The building has some of the tallest floors in the city, spanning nearly 200,000 square feet each, large enough to hold more than three football fields each. The company said the bulky floors would allow it to “collaborate and innovate.”

The deal could give Vornado a boost, who, like many of his peers in the office REIT industry, saw its shares drop sharply during the viral crisis. The company’s stock was trading at $ 34.02 at the close of trading on Monday, about 50% below its 52-week high. Vornado has owned Facebook for years at 770 Broadway, which is owned by the REIT.

“Facebook’s commitment to Farley expands our long-standing relationship,” Steven Roth, president and CEO of Vornado said in a statement.

Roth added that “the engagement is yet another testament to New York’s extraordinary talent and strengthens New York’s position as the nation’s second technology hub.”

Do you have any advice? Contact Daniel Geiger at [email protected] or through the Signal encrypted messaging app at +1 (646) 352-2884, or Twitter DM at @ dangeiger79. You can also contact Business Insider securely through SecureDrop.

LEAVE A REPLY

Please enter your comment!
Please enter your name here