Once upon a time, tech companies powered New York's economy. Now they are shrinking. (2023)

Once upon a time, tech companies powered New York's economy. Now they are shrinking. (1)

After years of steady growth, many tech companies are laying off employees and giving up millions of square feet of office space in the city.

Many tech companies have tried to sublet vacant office space in New York following the layoffs as many employees are working from home.Credit...Gaby Jones for the New York Times



  • Chapter 460

crossjulie creswell,Peter Ives,emma goldbergYmatthew haig

For the better part of the past two decades, including during the pandemic, tech companies have been the bright spot of New York's economy, creating thousands of high-paying jobs and adding millions of square feet of office space.

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Its growth increased tax revenue, made New York a credible competitor to the San Francisco Bay Area, and created jobs.Help cities registerLayoffs also occurred in other industries during the pandemic and the 2008 financial crisis.

Now, the tech industry is in sharp decline, clouding the city's economic future.

Statistics show that major tech companies have laid off more than 386,000 employees worldwide since the start of 2022 amid many business challenges.Redundancies. For reference only, which tracks the tech sector. They have lost millions of square feet of office space due to layoffs and the shift to working from home.

The layoffs have hit many tech hubs, with San Francisco hardest hit, with an office vacancy rate of 25.6%, according to Newmark Research.

New York is doing better than San Francisco (Manhattan has a vacancy rate of 13.5 percent), but it can no longer rely on the tech sector for growth. Of the roughly 22 million square feet of office space available for sublease in Manhattan, more than a third comes from technology, advertising and media companies, Newmark said.

Take Meta, which owns Facebook and Instagram, for example. Currently, the company is unloading most of the area of ​​more than 2.2 million square meters.office spaceThat year, the company laid off about 1,700 workers, or a quarter of its workforce in New York state, before encroaching on Manhattan in recent years. The Company has elected not to renew the leases for 250,000 square feet at Hudson Yards and 200,000 square feet at Park Avenue South.

Spotify is seeking to sublet five of the 16 floors it leased at 4 World Trade Center six years ago, while Roku is offering up a quarter of the 240,000 square feet it leased in Times Square last year. Twitter, Microsoft and other tech companies are also experimenting with subleasing unnecessary space.

"Technology has become such a big player in real estate in the last five years," said Ruth Colp-Haber, managing director of Wharton Real Estate Advisors. They seem to be taking shortcuts, the question is: who will replace them? ?"

Ms Corpp-Harber said it could take months to sublet larger areas or entire floors of buildings. The oversupply of sublet space also leads to declining rents for new leases by landlords.

“They are going to underestimate all the owners, and they have very good space, and they are all built,” he said, referring to the technology companies.

Since the dotcom bubble in the late 1990s helped create the "A SiliconeSouth of the city center. Then, after the financial crisis, when banks, insurance companies and other financial firms collapsed, the expansion of companies like Google bolstered the economy.


Once upon a time, tech companies powered New York's economy. Now they are shrinking. (2)

Small and large technology companiesaddAccording to the New York State Comptroller, New York added 43,430 jobs over the five years to 2021, an increase of 33%. And the jobs pay well: According to the Auditor General, the median salary in the tech industry is $228,620 in 2021, nearly double the city's private sector average.

Job growth has fueled demand for retail space, Newmark said, with technology, advertising and media companies accounting for nearly a quarter of new office leases signed in Manhattan in recent years.

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Microsoft and Spotify declined to comment on their decision to sublet the space. Twitter and Roku did not respond to requests for comment. Meta said in a statement that she is "committed to distributed work" and "continually refining" her approach.

Some big tech companies are still expanding in New York.

Google plans to open St. Johns Terminal, a sprawling office near the Hudson River in lower Manhattan, early next year. Including the terminal, Google will own or lease about 7 million square feet of office space in New York, according to company officials, up from 6 million square feet today. (Google rents out more than 1 million square feet of space to other tenants.) The company has more than 12,000 employees in the New York area, up from more than 10,000 in 2019.

Amazonas, 2019plan canceledThe company built a huge campus in Queens after local politicians objected to the incentives offered to the company. However, since 2019, 200,000 square feet of office space has been added in New York, Jersey City, and Newark. The company will add about 550,000 square feet of office space later this summer when it opens at 424 Fifth Avenue, the former Lord & Taylor department store that the company acquired for $1.15 billion in 2020.

"New York offers an outstanding and diverse talent pool, and we're proud of the thousands of jobs we've created across the city and state in our corporate and operational functions over the past 10 years," said Holly Sullivan, Vice President The InOne Amazon statement said that the global economy was developing.

While many tech companies continue to allow their employees to work from home most of the week, they are also looking to entice workers into the office, which could help reduce the need to sublet space.

Salesforce, a software company with offices in a high-rise building next to Bryant Park, said it would not consider subletting its New York office space.

"Right now, I'm facing the opposite problem in my New York building," says Relina Bulchandani, Salesforce's director of real estate. "We have worked together to further develop the right positions in New York, where we have a very large client base."

Industry officials say New York is and will continue to be a vibrant home for tech companies.

"It's important that you haven't heard of a single tech company leaving the country," said Julie Samuels, president of the TECH:NYC trade association. We see a smaller decline in technology leasing than in other major cities.”


Fred Wilson, a partner at Union Square Ventures, said tech executives no longer feel the need to stay in Silicon Valley, a shift he says has benefited New York. “There are more CEOs and founders in New York today than before the pandemic,” Wilson said, referring to the companies his firm has invested in.

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"We are currently working on several deals with small early-stage technology companies looking to sublease space," said David Falk, president of Newmark's New York Tri-State region.

However, many companies are still in retreat.

In 2017 and 2019, Stockholm-based Spotify signed leases totaling more than 564,000 square meters at 4 World Trade Center, becoming one of the largest tenants there. Before long, a room was set up with all the amenities one would expect from a tech company: colorful, flexible workspaces, stunning views, and a ping-pong table.

But in January, Spotify announced that it would lay off workers600 personas, about 6 percent of its global workforce. The company, which offers its employees the option to work fully remotely or on a hybrid schedule, also reduced office space and subleased five floors.

"When I'm alone, I sit in a conference room all day and focus," said Dayna Tran, a Spotify employee who often works out of a downtown office, adding that incoming employees get motivated by playing on the office. Build a community by collaborating on lists.

correction done

July 25, 2023


An earlier version of this article misrepresented the scale of layoffs at big tech companies as of early 2022. They laid off more than 386,000 employees worldwide, not just in the US.

how we deal with corrections

julie creswellis a reporter based in New York. His practice spans banking, private equity, retail and healthcare. He previously worked at Fortune and has written for Dow Jones on debt, monetary policy and mutual funds. More about Julie Creswell

Peter Ivesis a New York-based reporter covering business and markets. Before joining The Times in 2012, he worked at the Wall Street Journal. More about Peter Ives

emma goldbergFuture work in the corporate area will be covered. More about Emma Goldberg

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matthew haigCovers the intersection of real estate and politics in the New York area. Previously, he was a general and breaking news reporter for The Times and an education reporter for The Dallas Morning News. More about Matthew Harger

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Why are tech companies shrinking? ›

Technology companies saw price increases for services, so companies had to evaluate and make cuts if necessary. Businesses look to cut costs to cover their increased expenses due to inflation. Laying off employees is typically one of the first cost-cutting measures because they are one of the largest company expenses.

Why is the tech sector struggling? ›

For decades, the industry's potential seemed boundless. So why has tech suffered so much more than its corporate peers have lately? That question has two answers: Federal Reserve Chair Jerome Powell's effort to stamp out inflation, and the waning of a pandemic emergency during which many tech companies thrived.

Is tech facing a recession? ›

Facing an uncertain global economy and slowing revenue growth, technology companies have picked up the pace of layoffs in 2023, with total staff cuts now greater than all tech company job losses last year. Here's an updated timeline of the more notable layoffs, and the reasons why Big Tech is in turmoil.

Are tech jobs declining? ›

Overall, however, tech occupations throughout the economy declined by an estimated 171,000, according to CompTIA. The unemployment rate for tech jobs edged up from 2% to 2.3%, still well below the national unemployment figure. Software developers were in particularly in high demand, according to CompTIA.

Is tech job market shrinking? ›

The Big Tech hiring tumble

According to Layoffs. fyi, nearly 213,000 tech employees worldwide have been laid off in 2023 as of early July. Wahlquist says the downsizing was a response to the “irrational hiring exuberance” that occurred during the pandemic when Covid-related stimulus spurred Big Tech growth.

Why do so many tech companies fail? ›

This happens when tech startups are not generating enough revenue to cover their costs and make a profit. Without a sustainable business model, it is very difficult to scale your startup and make it successful in the long term. For example, a tech startup hires an onsite, in-house software development team too soon.

What tech companies are struggling? ›

The tech industry seems to be in a recession. Although overall unemployment is still very low, just about every major tech company—including Amazon, Meta, Snap, Stripe, Coinbase, Twitter, Robinhood, and Intel—has announced double-digit percentage-point layoffs in the past few months.

What do tech companies struggle with? ›

Shortage of qualified software developers

The bottom line is that more than 50% of employers are having trouble hiring experienced technicians. The Gartner study says that staff shortages are becoming a significant problem in the introduction of innovative technologies in the work of companies.

Are tech companies still growing? ›

After tech stocks fell 30% last year, with some Big Tech firms faring even worse, 2023 has been a year of recovery in the sector. Alphabet shares have surged nearly 18%, Microsoft has gained more than 15%, and Amazon and Meta are up 21% and 67%, respectively.

Why is tech declining? ›

The decline came due to higher interest rates, high inflation and uncertain economic conditions. Some analysts believe specific sectors, like cybersecurity and robotics, present an opportunity for investors.

What happens to tech companies in a recession? ›

The good news is that tech stocks are generally among the first to surge out of the gate in a new bull market. That's because a recession often prompts the Fed to lower interest rates, and lower rates help tech stocks outperform for the same reason that they tend to underperform in a rising interest rate environment.

Are tech layoffs because of recession? ›

But while these job losses are sudden and no doubt disruptive to the people impacted, they're not the wave of job cuts that would signal a recession, economists say. “We're not in a recession yet” and may not realize we're in one until it's over, says ADP chief economist Nela Richardson.

Are most tech companies laying off? ›

By the numbers

In 2023: More than 144,540 workers in U.S.-based tech companies (or tech companies with a large U.S. workforce) have been laid off in mass job cuts, according to a Crunchbase News tally. In 2022: More than 93,000 jobs were slashed from public and private tech companies in the U.S.

Why do people leave the tech industry? ›

But some workers who recently left the industry say they've found fulfillment shifting to non-tech ventures that are passion projects, socially engaging or lifelong dreams. Still, their journeys haven't been without challenges, including attracting customers and being more judicious with money.

What jobs will technology not replace? ›

As such, jobs that require high emotional intelligence, such as therapists, social workers, and nurses, are not likely to be replaced by AI. Specialized Professionals: Jobs that require deep expertise in a particular field, such as doctors, lawyers, and scientists, are less likely to be fully replaced by AI.

Is the tech industry oversaturated? ›

Tech Is Oversaturated in Some Areas but Not Everywhere

Overall, the tech market today is oversaturated in terms of the number of devices it puts out without substantial improvements. However, that doesn't mean there isn't room to grow. There is still plenty of innovation happening if you know where to look.

Will Big Tech ever recover? ›

Big tech has enjoyed a resurgence this year. Seven large US companies (Apple, Microsoft, Alphabet, Amazon, Tesla, Netflix and Nvidia) have collectively returned 34% in the four months to 30 April 2023.

Why is Google laying off employees? ›

The company described the layoffs as a “difficult decision to set us up for the future” amid a difficult economic environment, and apologized that it would be “saying goodbye to some incredibly talented people we worked hard to hire and have loved working with.”


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