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It’s safe to say this wasn’t the start to the new year Los Angeles office brokers were hoping for.
Many big-name technology and media companies led office leasing in LA. Pre-pandemic days — We have extended employee layoffs over the past week. About 60 U.S. tech companies have cut about 12,000 employees since the beginning of 2024, according to the report. layoff.fyitrack technology workforce reductions.
Cost-cutting measures signal a decline in the need for workplace real estate, further hampering an already constrained office market.
Microsoft (MSFT) On Thursday, the company announced it would lay off 1,900 employees, about 9 percent of its video game division, including its Los Angeles-based video game division. activision blizzard (Microsoft acquired it about three months ago for $69 billion). Activision’s headquarters are: pen factory In Santa Monica ( JP Morgan I got it somewhere in LA. most expensive office deal The company has offices and studios in El Segundo, Woodland Hills, Sherman Oaks and Irvine (first reported in Colorado in 2023), according to its website.
Other companies that made up the once thriving video game development industry esports submarket The company also announced layoffs this month.Earlier this week, Los Angeles-based video game developer riot games announced the layoffs of 530 people, about 11 percent of its workforce. double the number of employees Over the last few years.
Social media companies are also slimming down. this week, tick tock, one of its most popular platforms, has announced approximately 60 layoffs affecting offices in Los Angeles, New York, Austin and internationally. The company’s parent company recently signed one of the most notable expansions of 2023. Add over 143,000 square feet It left its mark on Culver City.
Early this month, Amazon (AMZN) cut The streaming services and studio division has hundreds of employees.including Culver City (after cutting 27,000 jobs nationwide in 2022 and 2023). Google The company has also laid off another 1,000 employees this year as it spends large amounts of money reducing its real estate footprint, and recently Abandoned plans to move to a landmark office project At the former Westside Pavilion in Los Angeles
The full impact of the layoffs and cost reductions remains to be seen and will be felt later this year. But it certainly points to a softening in space demand. More than 15 percent of available sublease space in Los Angeles as of the third quarter of 2023 came from technology companies, according to data from . Savills.
“Current adjustments to the technology sector continue to result in job cuts and high-profile office spaces are closing. [Los Angeles] The sublease market could shrink or leases could be terminated completely,” Savills reported.
Mass media companies with a large presence in Los Angeles have also been hit hard. paramount global It announced Thursday that it would endure layoffs, but did not say how many. (Last summer, Paramount’s showtime Communication network Ends 10 year 50,000 sq ft lease Located in West Hollywood. ) Los Angeles Timesis famous for moving its office from downtown Los Angeles to El Segundo in 2018. 115 people laid off on tuesday.
Office availability Los Angeles has already reached an all-time high since the end of 2023.Los Angeles office occupancy is below 48 percent, according to security firm castle system‘s latest “Return to Work Barometer” report.
According to the report, office occupancy in Los Angeles was already 27,100 fewer in November than it was 12 months earlier. Newmark (NMRK). Most of the losses came from the information sector, which generally groups technology and media companies. meta, Hulu, NetflixAmazon, Google, Roku and spotify It was part of a large-scale layoff in 2023.
Gregory Kornfield can be contacted at: [email protected].
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