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Meta Terminating Midtown South Office Lease Amid Cost-Cutting Push

Meta Terminating Midtown South Office Lease Amid Cost-Cutting Push

Meta Platforms Inc.'s sweeping plans to reorganize teams and decrease headcount will also include scaling down operations in New York City, according to Bloomberg, citing people familiar with the matter. 

Last week, CEO Mark Zuckerberg gave a gloomy outlook on the economy and the need to implement a hiring freeze and restructure employee teams in the latest effort to trim costs. 

"For the first 18 years of the company, we basically grew quickly basically every year, and then more recently our revenue has been flat to slightly down for the first time," Zuckerberg told staff Thursday.

"I had hoped the economy would have more clearly stabilized by now, but from what we're seeing it doesn't yet seem like it has, so we want to plan somewhat conservatively," he added.

Now we're getting an indication that cost-cutting doesn't stop with labor but also it's the overall corporate footprint. The social media giant is exercising an option to terminate its lease at 225 Park Ave. South in Manhattan, where it occupied more than 200,000 square feet. 

"Two twenty-five Park Avenue South has served as a great bridge space to get us to our new offices at Hudson Yards and Farley.

"We are working to ensure we're making focused, balanced investments to support our most strategic long-term priorities," Meta spokesperson Jamila Reeves told Bloomberg in an email. 

Facebook first leased 225 Park Ave. South in 2016. The terms of the deal aren't public, but if it were a 10-year lease (standard in the industry), then this would mean Facebook ditched one of its earlier Manhattan office spaces with four years left. 

"While Facebook has exponentially grown its real estate footprint in the past several years, it's recently been pulling back. This summer, it backed out of a 300,000-square-foot expansion at Vornado Realty Trust's 770 Broadway and also paused plans to build out its Hudson Yards space," The Real Deal said. 

Further cost-cutting is Meta's starkest admission that advertising revenue growth stalled. Meta's shares are down a whopping 64% from the September 2021 peak of $378 per share to $138. There have been many dead cat bounces since the peak... 

... and this is only going to make the office space glut even worse in the metro area. 

Zuckerberg is making a risky bet on the metaverse, an effort, if it doesn't pan out, could suggest Facebook suffers the same fate that MySpace did as other social media platforms, such as TikTok, dominate. 

Tyler Durden
Tue, 10/04/2022 - 14:08