The permanent work-from-home dream envisioned by many tech employees isn’t quite here yet. For proof, look no further than the money still being thrown around by companies on pricey real estate.
Alphabet CEO Sundar Pichai announced Wednesday plans to spend $9.5 billion on U.S. office space and data centers this year, up from $7 billion last year but still short of the pre-pandemic $13 billion commitment in 2019. Crain’s New York Business also reported Tuesday that Meta plans to lease about 300,000 square feet of additional space covering several floors in a lower Manhattan office building, adding to the Facebook parent’s growing New York City footprint.
The two developments follow a busy period of commercial real estate buying and leasing by tech companies, illustrated by a report earlier this year from CBRE that showed the industry accounted for 36 of the 100 most-expensive leases inked nationwide in 2021, up from 18 in the prior year. A separate CBRE study found purchases of Silicon Valley office buildings and research and development facilities reached a record $8.7 billion in 2021, with tech companies leading the way, The Mercury News reported.
The spending spree delivers a message to employees clamoring for a better work-life balance: you’ve got to meet us halfway.
While tech companies continue to roll out sought-after hybrid and all-virtual work options to staffers, the investment in real estate shows that many top executives remain committed long-term to some form of in-person collaboration.
“It might seem counterintuitive to step up our investment in physical offices even as we embrace more flexibility in how we work,” Pichai wrote in a blog post Wednesday. “Yet we believe it’s more important than ever to invest in our campuses and that doing so will make for better products, a greater quality of life for our employees, and stronger communities.”
The real estate boom arrives as several well-known tech outfits begin allowing their employees to indefinitely work remotely, if they so choose. That list of companies continues to grow by the month: Cisco, Twitter, Spotify, Shopify, Lyft, Dropbox, and Coinbase, among others.
Most of the industry’s largest companies, however, are embracing the hybrid model, bringing employees back onto corporate campuses on a part-time basis.
Microsoft reopened its corporate offices in late February. Google brought most employees back into buildings last week. Apple ordered corporate staffers to spend at least one day in the office, starting this week, with plans to ramp up to three days by this summer. Meta, Amazon, Intel, and Salesforce all offer flexible work schedules now.
The reopening came as employees continued to signal their displeasure with cubicle drudgery. A recent Advanced Workplace Associates survey of nearly 10,000 white-collar workers found that 86% of them want to work from home at least two days per week. A separate poll from June 2021 by Fortune and Momentive showed nearly half of 2,000 respondents working from home would search for another job if forced to return to offices once the pandemic subsides.
The hybrid approach marks a realistic concession by tech employers, who value the benefits of in-person experiences but fear a mass exodus of staffers to all-virtual rivals.
The coming months will show whether concerns about talent fleeing to online-only competitors materialize, forcing tech giants to double-down on virtual work. But based on their real estate spending habits, it doesn’t look like tech executives are too concerned at the moment.
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Jacob Carpenter
NEWSWORTHY
Tuning them out. CNN’s new subscription streaming service is registering fewer than 10,000 viewers daily since its launch in late March, a meager tally that calls into question its viability as a standalone platform, CNBC reported Tuesday, citing sources familiar with the figures. The disappointing viewership figures for CNN+ add to wide skepticism about the news network’s ability to collect subscribers willing to pay for its content in a crowded streaming sector. CNN parent WarnerMedia pushed forward with the launch of CNN+ despite its imminent merger with Discovery, which started trading as a new company this week.
Speaking up. Apple CEO Tim Cook used a rare public speech Tuesday to criticize rival tech companies’ mining of user data, while also warning policymakers about the potential implications of legislation targeting the company’s lucrative App Store, Ars Technica reported. Speaking at an International Association of Privacy Professionals conference, Cook called digital privacy “one of the most essential battles of our lifetime” and claimed Apple products are designed to “protect people from a data industrial complex built on a foundation of surveillance.” The Apple chief reiterated his belief that proposed legislation in the U.S. and European Union designed to increase app store competition would hurt user privacy, an argument that Apple detractors decry as unfounded.
A tight time frame. Meta leaders hope to unveil the company’s first iteration of augmented reality glasses by 2024, a potentially ambitious target given its lack of a working prototype, The Verge reported Wednesday, citing sources familiar with the plans. Meta CEO Mark Zuckerberg wants the glasses to feature 3D graphics, a market-leading wide field of view, and a relatively lightweight design, sources told The Verge. Meta is investing billions of dollars in developing augmented and virtual reality technology, with the goal of selling millions of glasses by the end of the decade.
Better never than late? Former Twitter shareholders filed suit Tuesday against Elon Musk, alleging the Tesla CEO’s failure to timely disclose his acquisition of a large stake in the social media outfit caused them to miss out on huge gains in the company’s stock. The shareholders, who are seeking class action status, argued that Musk made “materially false and misleading statements and omissions” when he missed a March 24 regulatory deadline for disclosing he had bought 5% of Twitter shares. Musk filed the required paperwork on April 4, leading to a 27% spike in Twitter’s share price that day. Twitter shares are trading 15% higher since March 24.
FOOD FOR THOUGHT
Waiting on Washington. The U.S. can’t even get legal immigration right, as evidenced by a new Axios report on green cards for high-skilled workers. The outlet reported Wednesday that top tech companies fear the federal government will waste about 100,000 out of 280,000 employment-based green cards, many of which are sought by engineers and computer science specialists hired at top tech companies. The backlog resides at U.S. Citizenship and Immigration Services, which struggles to maintain enough staff to process the applications.
From the article:
The pandemic contributed to processing delays, as did a sharp increase in the number of employment-based visas available.
“When employees are going through this process, the fear, uncertainty, anxiety and doubt created by the backlog in processing is just brutal," Microsoft associate general counsel Jack Chen told Axios.
"When people don't have clarity on how many years—or even decades—it will take to get a green card, it makes it that much harder to attract and retain talent to the U.S.," he said.
IN CASE YOU MISSED IT
EA Sports says video game A.I. is poised for a big leap, by Chris Morris
Most executives are clueless when it comes to this aspect of artificial intelligence, by Jonathan Vanian
Wall Street expects profits to soar but stocks to flop as Q1 corporate earnings season begins, by Bernhard Warner
Meta plans to take a nearly 50% cut of virtual asset sales in its metaverse, by Chris Morris
IMDb TV will be renamed Amazon Freevee, by The Associated Press
Uber and Lyft halt surge pricing after New York City shooting, by Jackie Davalos and Bloomberg
BEFORE YOU GO
We’re gonna live forever. Metaverse startup Somnium Space takes the phrase “if the dead could talk” very literally. The outfit, led by founder and CEO Artur Sychov, recently described to VICE a potentially promising/chilling/poignant vision for a new metaverse technology designed to give a voice to the deceased. Sychov said his company is working on systems that would allow users to record their speech and movements, convert them into a life-like avatar, and produce dialogue in the image of the user via artificial intelligence. The end goal: allowing people to converse with their dearly departed loved ones long after death.
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