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When Microsoft President Brad Smith announced in February 2021 that the tech giant had purchased 90 acres of land on Atlanta’s Westside, he laid out a bold vision: The company, he said, would invest in the community and keep it “on the edge.” Towards becoming one of the largest Microsoft centers in the United States.
Announcementmet with enthusiastic coverage in local media, promised the creation of affordable housing, programs to help public school children develop digital skills, support for historically black colleges and universities, new funding for local nonprofits, and Affordable broadband promised to more people in Atlanta.
“Our biggest question today is not what Atlanta can do to support Microsoft,” Smith wrote. “This is what Microsoft can do to support Atlanta.”
Two years later, Microsoft announced a series of cost-cutting efforts, including eliminate 10,000 jobs, transitioning to its hardware portfolio and consolidating leases. As part of those moves, Microsoft halted development on its Atlanta campus this month, a spokesperson confirmed to CNN.
The decision to halt the plans feels like a “broken promise,” which has caught many residents of predominantly Black neighborhoods where Microsoft Planned to make campus off-guard, according to Jasmine Hope, a local resident and chair of her neighborhood planning unit.
“All the promises of, ‘We’re going to put a grocery store here, we’re going to bring jobs to this area, we’re going to build a pipeline between the schools and Microsoft to create jobs,’ it all sounds like It’s out the window,” she told CNN. “But the consequences are still being felt by the neighborhood.”
A Microsoft spokesperson said the land is not for sale, “and we still want to set aside a quarter of the 90 acres for community needs.” “Microsoft will continue to make a positive impact in the region and be a contributing community partner,” the spokesperson said.
As the tech industry boomed in the United States over the past decade, cities across the country vied to become tech hubs. State and city officials vied for the Silicon Valley giants to bring offices, data centers and warehouses to their communities in the hopes of creating jobs and bringing other benefits that cash-strapped local governments can’t afford on their own. Can struggle for funds. Perhaps the starkest example of this, 238 communities submitted bids for Amazon’s second headquarters in 2017, some offering major tax breaks or even Change the name of the land to “Amazon City”.
But now, many big tech companies are re-thinking their costs, after years of relentlessly hiring and expanding. Reason: A perfect storm of post-pandemic demand for online services, rising interest rates and recession fears. Much of this tech slowdown so far has focused on a long list of layoffs, but companies have also teased plans to dramatically reduce real estate spending across the country.
Facebook-parents Meta, Microsoft, Salesforce and Snap have each closed offices or announced plans to cut real estate, according to recent corporate announcements, filings and local news reports. Some tech companies have said they will allow leases to expire or phase out entirely. Meta CEO Mark Zuckerberg Said His company is “transforming desk-sharing for people who already spend most of their time outside the office.”
The effects of those shortfalls can already be felt across the country, from New York City, where the Meta Allegedly extended its real estate footprint back to San Francisco in the Hudson Yards neighborhood, where some local businesses say they are facing the effects of remote work and many tech office closures.
“Tech had grown significantly in market share to become the top industry leasing office space across the US, and that started back in 2012, 2013,” said Colin Yasukouchi, executive director of the Tech Insights Center at commercial real estate firm CBRE. , According to CBRE data, however, in 2022, finance and insurance companies will overtake the tech industry to account for the highest share of US office leases.
“In fact, over the past few quarters, you’ve seen the tech industry significantly reduce its leasing activity,” he said. “That’s really, I think, the biggest effect that you’ve seen of these layoffs and austerity measures: the leasing activity pullback by the tech industry.”
But the impact of that pullback is perhaps greatest in communities with less robust tech hubs.
The Quarry Yard, on Atlanta’s west side, has been the source of some promise and dashed hopes. In 2017, Georgia officials included the former industrial area on a list of sites where Amazon could build its second headquarters, as part of its pitch to the e-commerce giant. Amazon eventually moved in with other cities, but four years later, another Seattle tech giant took over the land.
after purchase, Microsoft described Quarry Yard as a place with “wide, tree-lined streets” but “cracked pavements”. The area, Microsoft said, is a “food desert without a grocery store, pharmacy or bank.”
The community includes “a lot of elderly, black neighbors,” according to Hope. He said these residents have worried about gentrification and displacement over the years in the form of rising housing prices and property taxes in the metro Atlanta area.
“Just announcing Microsoft was coming to town” brought new buyers and developers to the area, she said, adding to these longstanding concerns. data from Zillow The fastest rate of increase in median home values in the neighborhood between January 2020 and December 2022 Atlanta as a Whole,
But there was also cautious optimism about residents The benefits Microsoft promised to the community according to Hope. Now, the community is left with higher prices but none of the promised reforms or economic opportunities. “We are not seeing any benefit and are only going to deal with the consequences,” she said.
“It looks like the community is going to be burdened by this now,” she said.
The community of Hope isn’t the only one facing the whiplash of Silicon Valley’s real estate pullback. Late last month, the city of Kirkland, Washington said in a Press release It was informed by Google that the company would not proceed with its proposed redevelopment project that initially aimed to bring a massive new campus to the city.
Kirkland City Council meeting Held last summer, Google representatives teased a number of community benefits from the construction — including infrastructure improvements, such as building bike lanes and pedestrian trails, as well as more than $12 million in affordable housing. The planning process between Google and the city had been taking place since the fall of 2020.
“As we continue to shape the workplace experience of our future, we are working to ensure that our real estate investments meet the current and future needs of our workforce,” said Ryan Lamont, a Google the spokesperson told CNN in a statement. “Our campuses are at the heart of our Google community, and we are committed to our long-term presence in Washington state.”
Even San Francisco, whose fortunes are more tied to Silicon Valley than any other city, is showing signs of strain from the one-two punch of shifts to remote work and office closures.
According to CBRE, the office vacancy rate in the city reached a record high of 27.6% in the last three months of last year as compared to the pre-pandemic figure of 3.7%.
“The previous high was about 20% after the dotcom bust,” CBRE’s Yasukouchi told CNN. “We are at the highest point our record has shown.”
Yasukochi said the rise of remote and hybrid work has been a key driver among tech giants cutting back on their real estate investments. Then came the recent cost-cutting measures.
Local business owners say they are now feeling the effects.
Mark Nagle, a 21-year-old Irish pub and restaurant owner in downtown San Francisco, told CNN he’s recently seen a “cascade of closures” of tech and corporate offices in his neighborhood — including the shuttering of one. Snapchat office right down the street.
“We’re generally in a great location, we’re downtown,” Nagle said. But now his business is surrounded by several vacant retail spaces and several lots under construction.
Since the start of the pandemic, the number of regular workers in the area has not returned, Nagle said, and neither have their businesses. Nagle said that in addition to employees stopping by for a drink at the end of their days, nearby companies often held events and meetings at The Chieftain, but those, too, have largely closed.
He said at least six bars and restaurants within his two-block radius have closed in recent years.
“You’re running less and it’s made the business so much more unpredictable,” he said. “And we are one of the lucky ones who can keep our doors open.”
— CNN’s Claire Duffy contributed to this report.