In a surprising move, Meta, the parent company of Facebook, has ended its lease on a central London location at 1 Triton Square 18 years earlier than expected. While the move aligns with Meta’s push to have employees work in the office three days a week, surrendering the space comes at a significant cost of £149 million ($181 million). This payment is equivalent to seven years of rent and has stunned analysts. It raises questions about whether the reduction in in-office work, compared to the pre-pandemic five-day norm, justifies such high overheads.
One possible reason for Meta’s decision to give up the Triton Square location is a decrease in its staff numbers. During the pandemic, the company underwent a hiring spree but later announced mass layoffs. It’s possible that Meta no longer has the same number of employees to occupy all its office spaces. However, the company still has three other locations in London, including its office at King’s Cross, which opened last year. But Meta’s hefty payment to get out of its lease at Triton Square is unprecedented and raises concerns about commercial landlords’ prospects in a hybrid working world.
For British Land, the landlord of Meta’s former location, securing a new tenant for the Triton Square building becomes a challenge. While British Land remains comfortable with its full-year expectations and has leased significant space in recent months, not all landlords share the same optimism. Experts warn that lackluster portfolios and office spaces without the best locations or amenities may become obsolete. In the US, the commercial real estate debt due for repayment by the end of 2025 poses a $1.5 trillion headache, and billion-dollar defaults have already begun. These challenges highlight the evolving landscape of office spaces in the post-pandemic era.