One of Silicon Valley’s largest subleased properties has taken on a new lease as the online arm of global retailer Walmart has agreed to take over a vast swath of space no longer needed by Facebook’s parent company Meta.
Walmart.com will take over the entire four buildings. moffett green The deal has been closed since the start of the pandemic in early 2020, according to four local real estate brokers with knowledge of the deal who were not authorized to speak publicly. The company has moved to a campus in Sunnyvale, Calif., as part of a deal that is one of the largest leases ever undertaken.
A Walmart representative did not immediately respond to Coster News’ request for comment, and Mehta declined to discuss the deal.
Mehta decided to relinquish its approximately 720,000 square foot campus shortly after signing a deal to occupy the Silicon Valley campus itself in December 2021. At the time, this was the largest private sector office lease of the year. The company ultimately signed a deal for the former NetApp headquarters complex with its then-landlord Tishman Speyer, despite recently adopting a lenient remote work policy.
international developer Moffett green sold It was acquired by Los Angeles investment firm Commonwealth Partners in June 2022 for $707 million, a purchase price that primarily reflects Meta’s tenancy in the complex.
The Mountain View, Calif.-based tech giant originally signed the Moffett Park deal to reduce commute times for employees and support public transportation, Meta spokeswoman Chloe Mayerle told Coster at the time. told the news. Many employees at the time were still allowed to work remotely, but they are expected to return at least part-time starting in 2022, unless an extension is granted, he said.
Like other tech giants, Facebook’s parent company has been aggressively cutting jobs since the beginning of the year, as demand for its products and services soars and it has to lease, develop or acquire vast amounts of space. , reversing a decade of expansion. This is in response to a record increase in the number of employees.
But the tide quickly turned, and Meta has since responded to slowing revenue growth and heightened economic uncertainty by prioritizing profitability over expansion.
Meta, as well as other tech companies including Alphabet, Salesforce and Amazon, saw sales, user numbers and ad numbers soar in the early days of the pandemic, but are now grappling with an economic slowdown and fears of a recession.
Many Silicon Valley tech giants have responded by drastically reducing their real estate holdings by closing offices, subletting unneeded space, terminating pre-lease agreements and withdrawing from future investments. Those decisions have loaded the Bay Area real estate market with millions of square feet of subleased space and downsized offices as leases come to an end.
For Meta, it resulted in a swift downsizing that reversed years of blockbuster leases and high-profile expansions. Within the past year, Meta has sought to shed millions of square feet of office space that it no longer uses, needs, or doesn’t want to pay for. The company estimates it will take a hit of about $2 billion by the end of 2023 related to office consolidation and space exits.
The company ended its leases on two office buildings in Mountain View, California. Earlier this year, the company listed all 431,879 square feet on the property as a sublease. 181 Fremont Street A skyscraper in downtown San Francisco. The company is also selling a 113,585-square-foot building it leases across the San Francisco Bay in Fremont, California.
But the deal with Walmart — which the Registry reported earlier — proves that not all tenants are in such strict cost-cutting mode.
The availability of sublease in record quantities is providing businesses looking to expand their options cheaper than leasing directly from a landlord. Silicon Valley’s vacancy rate has climbed above 19% as tech companies like Meta and Google shed major sublease properties, according to CoStar data.
There is currently more than 8.2 million square feet of subleased space in technology-intensive markets, an all-time high.
The move to Moffett Green is an expansion of Walmart’s digital division, which currently leases approximately 600,000 square feet in the Sunnyvale Business Park. 840 West California Avenue The fate of that space has not yet been revealed.