6 ms·

Meta pays £149M to break London office lease

38 points by vinnyglennon 3y ago

version_five 3y ago
That's an insane amount of money. I can't read the article, it would be very interesting to see the rental costs they backed out of and how much they saved.
- rahimnathwani 3y ago
  Meta had another 18 years on its lease and paid the equivalent of about seven years of rent to get out of the obligation, according to BNP Paribas Exane analysts.
  - version_five 3y ago
    Wow. Thanks.
- SilasX 3y ago
  It is an insane amount! I initially assumed it was a case of “ha ha, M means a thousand, silly”, but no, the article confirms it’s millions, and equal to seven years of rent. Like, what? The landlord could fail to find another tenant for seven years and still come out ahead. There are either draconian anti-subleasing provisions, or office rents have plummeted.
  - fatfingerd 3y ago
    Seems nuts to me, but CEOs also get an interesting pressure not to effectively be in a second sector through real estate holdings, etc, so even if long term subleasing would have paid off they may not have wanted to. I guess its that having a lot of assets in a lower alpha sector will dilute the upside in a boom compared to a company that is totally leveraged to have all its value operating in the one sector. Fiscal madness.
    - SilasX 3y ago
      I get that in theory, but this seems like a special case where they'd want to apply some judgment, especially since it requires a massive commitment of upfront capital that FB could almost certainly deploy more efficiently somewhere else. Like, maybe I'd understand if the payments were due in a slow trickle over time, but article says that FB has already paid the full amount. This would compare to say, taking a small loss each month on the difference between the rent due and what a leasing manager could net from subleases. (Though I guess 149m is a rounding error to FB.)
  - htrp 3y ago
    >Like, what? The landlord could fail to find another tenant for seven years and still come out ahead. Most commercial leases are bespoke, and heavily favor the landlord. Meta being able to pay ONLY 7 years and break the lease speaks to their pricing power in the market place. Most leases are triple net which means you have to pay for everything (insurance, maintenance, taxes, etc basically as if you owned the building without owning the building) and include no provisions for lease breaks (meaning you're liable for the full amount of the lease, usually all 20 years of it).
    - SilasX 3y ago
      That doesn't address why they wouldn't be able to sublease, except for your overgeneral "they're all custom" (sorry, bespoke), which I thought was allowed for such a large lease. In any case, a citation would be helpful to shed light on the issue rather than more assertions.
- sacnoradhq 3y ago
  They leased the majority of a mixed-used building in downtown Austin that would've been 500k sq ft, the largest tenant by far of any company in the city. They quietly backed out of that. ($20M/mo easily) The most expensive part would've been staffing it: $20-60M/mo depending on the type of staff.
jstx1 3y ago
Hybrid working and desk sharing is the worst option for getting any actual work done. I'll gladly commute to an office where I have a dedicated desk with good equipment (2 monitors, keyboard etc) but having to work from a laptop without any dedicated space is just horrible.
- Detrytus 3y ago
  Desk-sharing offices still have 2 monitors and keyboard on each desk, you just get to sit in a different spot every time. At least that's how my company does it. (To be fair: my company allows us to work from home full time, hot-desks are there just for those rare occasions when someone needs/wants to come to the office)
  - wkat4242 3y ago
    Ours too but it's still terrible. Can't find my colleagues, I constantly need to drag my stuff everywhere. I hate the office now
4gotunameagain 3y ago
That's probably a good thing for proponents of remote work, since it means that they bit a bullet instead of forcing people to return I guess. I wonder if things keep going that way, how will downtowns evolve and also how will humans, spending even more and more time in less social environments. ps https://archive.ph/L3rAS https://archive.ph/L3rAS
- gumballindie 3y ago
  They do spend more and more time in more social environments, but with people that actually matter to them, not coworkers.
  - 4gotunameagain 3y ago
    Yeah, I don't think this is true for the average remote worker, and you have no way of proving it. At the end of the day, it does make you stay isolated in your room in front of a screen for 8 hours every day.
    - gumballindie 3y ago
      > it does make you stay isolated in your room in front of a screen for 8 hours every day. That's true for tech work regardless. Having said that, most remote workers do have a better social life from what i've seen. Many are even able to start a family - a luxury for tech workers.
- deleted 3y ago
  [deleted]
xdennis 3y ago
The same story from free sources: - https://www.msn.com/en-us/money/companies/meta-pays-149m-to-ditch-london-office-as-staff-work-from-home/ar-AA1hhn6m https://www.msn.com/en-us/money/companies/meta-pays-149m-to-... - https://www.irishtimes.com/business/2023/09/26/facebook-owner-meta-pays-149m-to-break-london-office-lease/ https://www.irishtimes.com/business/2023/09/26/facebook-owne... - https://news.sky.com/story/facebook-owner-meta-pays-149m-to-surrender-lease-on-london-office-12970300 https://news.sky.com/story/facebook-owner-meta-pays-149m-to-...
fuzzfactor 3y ago
At this scale they're going to need a huge amount of bigger unwanted expenses and unexpected losses in order to make this seem worthwhile.
simscitizen 3y ago
Probably consolidating their London office space. The main UK office is actually at Rathbone.
- cjrp 3y ago
  Combined with slowing down their hiring too I expect.
sacnoradhq 3y ago
They made a big, internal to-do of "commitment" to London for WhatsApp. Maybe it's still true. They still act like they're swimming in billions upon billions, frittering $10's of said billions a year on GPUs and datacenter buildouts without a specific purpose or need, while simultaneously cutting back on perks, making the work environment more worker-hostile, eliminating fixed desk assignments, closing eateries, RTO, and doing layoffs.
WentFullRetard 3y ago
[dead]
deleted 3y ago
[deleted]

38 points by vinnyglennon 3y ago

That's an insane amount of money. I can't read the article, it would be very interesting to see the rental costs they backed out of and how much they saved.

rahimnathwani 3y ago
Meta had another 18 years on its lease and paid the equivalent of about seven years of rent to get out of the obligation, according to BNP Paribas Exane analysts.
- version_five 3y ago
  Wow. Thanks.
SilasX 3y ago
It is an insane amount! I initially assumed it was a case of “ha ha, M means a thousand, silly”, but no, the article confirms it’s millions, and equal to seven years of rent. Like, what? The landlord could fail to find another tenant for seven years and still come out ahead. There are either draconian anti-subleasing provisions, or office rents have plummeted.
- fatfingerd 3y ago
  Seems nuts to me, but CEOs also get an interesting pressure not to effectively be in a second sector through real estate holdings, etc, so even if long term subleasing would have paid off they may not have wanted to. I guess its that having a lot of assets in a lower alpha sector will dilute the upside in a boom compared to a company that is totally leveraged to have all its value operating in the one sector. Fiscal madness.
  - SilasX 3y ago
    I get that in theory, but this seems like a special case where they'd want to apply some judgment, especially since it requires a massive commitment of upfront capital that FB could almost certainly deploy more efficiently somewhere else. Like, maybe I'd understand if the payments were due in a slow trickle over time, but article says that FB has already paid the full amount. This would compare to say, taking a small loss each month on the difference between the rent due and what a leasing manager could net from subleases. (Though I guess 149m is a rounding error to FB.)
- htrp 3y ago
  >Like, what? The landlord could fail to find another tenant for seven years and still come out ahead. Most commercial leases are bespoke, and heavily favor the landlord. Meta being able to pay ONLY 7 years and break the lease speaks to their pricing power in the market place. Most leases are triple net which means you have to pay for everything (insurance, maintenance, taxes, etc basically as if you owned the building without owning the building) and include no provisions for lease breaks (meaning you're liable for the full amount of the lease, usually all 20 years of it).
  - SilasX 3y ago
    That doesn't address why they wouldn't be able to sublease, except for your overgeneral "they're all custom" (sorry, bespoke), which I thought was allowed for such a large lease. In any case, a citation would be helpful to shed light on the issue rather than more assertions.
sacnoradhq 3y ago
They leased the majority of a mixed-used building in downtown Austin that would've been 500k sq ft, the largest tenant by far of any company in the city. They quietly backed out of that. ($20M/mo easily) The most expensive part would've been staffing it: $20-60M/mo depending on the type of staff.

jstx1 3y ago

Hybrid working and desk sharing is the worst option for getting any actual work done. I'll gladly commute to an office where I have a dedicated desk with good equipment (2 monitors, keyboard etc) but having to work from a laptop without any dedicated space is just horrible.

Detrytus 3y ago
Desk-sharing offices still have 2 monitors and keyboard on each desk, you just get to sit in a different spot every time. At least that's how my company does it. (To be fair: my company allows us to work from home full time, hot-desks are there just for those rare occasions when someone needs/wants to come to the office)
- wkat4242 3y ago
  Ours too but it's still terrible. Can't find my colleagues, I constantly need to drag my stuff everywhere. I hate the office now

4gotunameagain 3y ago

That's probably a good thing for proponents of remote work, since it means that they bit a bullet instead of forcing people to return I guess. I wonder if things keep going that way, how will downtowns evolve and also how will humans, spending even more and more time in less social environments. ps https://archive.ph/L3rAS https://archive.ph/L3rAS

gumballindie 3y ago
They do spend more and more time in more social environments, but with people that actually matter to them, not coworkers.
- 4gotunameagain 3y ago
  Yeah, I don't think this is true for the average remote worker, and you have no way of proving it. At the end of the day, it does make you stay isolated in your room in front of a screen for 8 hours every day.
  - gumballindie 3y ago
    > it does make you stay isolated in your room in front of a screen for 8 hours every day. That's true for tech work regardless. Having said that, most remote workers do have a better social life from what i've seen. Many are even able to start a family - a luxury for tech workers.
deleted 3y ago
[deleted]

xdennis 3y ago

The same story from free sources: - https://www.msn.com/en-us/money/companies/meta-pays-149m-to-ditch-london-office-as-staff-work-from-home/ar-AA1hhn6m https://www.msn.com/en-us/money/companies/meta-pays-149m-to-... - https://www.irishtimes.com/business/2023/09/26/facebook-owner-meta-pays-149m-to-break-london-office-lease/ https://www.irishtimes.com/business/2023/09/26/facebook-owne... - https://news.sky.com/story/facebook-owner-meta-pays-149m-to-surrender-lease-on-london-office-12970300 https://news.sky.com/story/facebook-owner-meta-pays-149m-to-...

fuzzfactor 3y ago

At this scale they're going to need a huge amount of bigger unwanted expenses and unexpected losses in order to make this seem worthwhile.

simscitizen 3y ago

Probably consolidating their London office space. The main UK office is actually at Rathbone.

cjrp 3y ago
Combined with slowing down their hiring too I expect.

sacnoradhq 3y ago

They made a big, internal to-do of "commitment" to London for WhatsApp. Maybe it's still true. They still act like they're swimming in billions upon billions, frittering $10's of said billions a year on GPUs and datacenter buildouts without a specific purpose or need, while simultaneously cutting back on perks, making the work environment more worker-hostile, eliminating fixed desk assignments, closing eateries, RTO, and doing layoffs.

WentFullRetard 3y ago

[dead]

deleted 3y ago

[deleted]