- Richard M. Gatto
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The Tech Boom’s Office Echo
As 2022 begins, office real estate is looking very different.
Once the domain of the financial sector, Google, Apple, Facebook and other tech companies are becoming the major buyers and leasers of New York City and Chicago workplaces. These acquisitions bode well for the office real estate market, which has endured tough conditions due to COVID-19.
In Manhattan, Google recently purchased Chelsea Market and St. John’s Terminal. The deals cement a growing trend: Wall Street had been the primary occupants of the Manhattan’s workplaces, but now tech companies are. Between 1990 and 2020, New York’s financial sector’s office occupancy declined from 48% to 35%. Whereas “the TAMI sector (technology, advertising, marketing and information companies), now holds 25% of New York’s leased office inventory, up from 16%,” according to Forbes journalist David Jeans.
Away from the coast, Chicago is experiencing a similar tech boom, resulting in major office real estate deals. First among them is Amazon’s expansion at 222 W. Adams St. and 227 W. Monroe St. But emerging tech companies are widening their presence in the city as well. For instance, a business and marketing intelligence startup, called Tegus, relocated from San Francisco to Chicago in part for the latter’s more-stable workforce. Chicago Sun-Times reporter David Roeder writes that Tegus’ CFO Bob Casey believes that “tech workers on the coasts job-hop in search of stock-option riches. In Chicago, there’s more commitment to building something.” To accommodate its 275 employees, “Tegus has taken two floors, or 47,000 square feet, at 200 N. LaSalle St. It also rents at 120 S. LaSalle St,” Roeder writes.
The tech sector’s investment in more space for workers is welcome news for pandemic-era leasers and developers. Despite ever-changing expectations of when the industry’s growing workforce will work in person again, tech companies are using their capital now to prepare for a large scale return to the office.