(This article originally appeared in The Guardian)
A strange thing is happening, thanks to the pandemic. While everyone is stuck working from home, some of the country’s largest tech companies are snapping up real estate like nobody’s business.
Google, for example, announced just last week that it was investing more than $7bn to open new offices and expand data centers across the country. The tech giant is opening offices and data centers in Atlanta, Pittsburgh and Cambridge, Massachusetts, as well as Portland, Oregon, Houston, Reston, Virginia, and South Haven, Mississippi. It will expand data centers and workspaces in Nevada and Nebraska, Washington state, Detroit, Chicago, Ann Arbor and Austin.
The tech giant will “keep growing our offices across the US”, a spokesman for the company said in the Fox Business report. And Google is not alone in this real estate expansion.
Facebook, according to a New York Times report, committed to a “mammoth” 730,000 sq ft lease in the middle of New York last August, which brings its presence up to more than 2.2m sq ft of office space in the city. Throughout 2020 Microsoft snapped up office leases across the country and Apple also added to its square footage in New York City. Amazon is planning a major expansion of nearly 2m sq ft of office space near its headquarters in Bellevue, Washington, and continues to lease and buy millions more square feet of warehouse and office space across the country and in places like New Jersey and Philadelphia.
It’s not just the tech giants that are snapping up real estate. Leases are quietly being signed by companies – big and small – in downtown and suburban areas across the country like Denver, Phoenix and even San Francisco.
Of course the real estate market took a major hit during the pandemic and, yes, some areas will probably take years to recover. Many companies are looking into reducing their square footage and one year into the crisis many urban areas are still ghost towns compared with their pre-pandemic activity. Rents are significantly lower than pre-pandemic levels and deals are way, way down. The real estate industry is gloomy and looking at a gloomy 2021.
But the leaders at Facebook, Google, Apple, Microsoft and Amazon aren’t thinking about 2021, or even 2022. Neither are their counterparts at Disney, Netflix, Morgan Stanley, Kia Motors and countless other firms you haven’t heard of. While some companies are retreating from the real estate market, others are jumping in. Why?
Because they see a not-too-distant-future where cities return to their normal levels of activity. And they’re snapping up deals when prices are low. This is not a bet. This is a certainty. Do you really think New York will not be New York? Or that downtown San Francisco will remain empty? C’mon.
“We are believers in offices, and I think there will continue to be good opportunities, particularly in the markets oriented around innovation, research, and content development,” Kathleen McCarthy, the senior managing director and global co-head of real estate for the investment giant Blackstone, recently told Fortune. “I think New York and San Francisco are experiencing a lot of pressure right now, but long-term, we think urban areas will get back to thriving.”
Considering that these tech companies built the platforms that have enabled millions of workers to work remotely you would think that they would be the biggest champions of reduced office spaces. But no, that’s not the case.
That’s because the people running these tech companies know full well that their products have limitations. They know that technology can provide mobility, flexibility, independence and a better quality of life. They understand that their software, hardware and e-commerce platforms have enabled millions of business people to operate their businesses even when they’re not in the office.
But they also know that an office, a workspace, a shared environment where humans interact face to face over coffee and donuts is a crucial part of any business. They understand that people working remotely do not connect, innovate, share ideas, debate, argue and brainstorm like they do when they’re together. They get that a company’s culture of innovation can’t be built from people’s homes, but from a place where people congregate.
Sure, they’ll all have – like many forward-thinking organizations – generous work from home policies, because that’s part of the work/life balance available to us and these benefits will be demanded by their employees, thanks to the pandemic. But they’re investing in office spaces because they have every intention of filling those offices with people.
So get ready folks: someday, some way, you’re coming back to the office.