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

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.

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.

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.

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.”

"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.