What just happened? Meta has paid a staggering $181 million to end a lease early on a London property that it never moved into. These sort of situations are becoming more common as an increasing number of companies adopt hybrid work schedules, leaving many spaces half-empty or unused.
As reported by the Financial Times, Meta had another 18 years on its lease at 1 Triton Square. The company paid £149 million (around $181 million), the equivalent of seven years of rent to end the agreement early.
"It is a staggering amount of money. In my 20 years, I can't think of a tenant paying [so much] to give back space they don't occupy," said Matthew Saperia, an analyst at Peel Hunt.
Meta rented the eight-storey building in 2021 following a major refurbishment but never moved in. The social media giant said in December that it would sublet rather than occupy the office. It has a second office building nearby that stretches across ten floors, as well as its main campus based in King's Cross.
Many companies are telling their employees to get back into the office following pandemic-induced work-from-home mandates. There's been plenty of pushback, even though the majority of firms are asking for hybrid schemes where workers come in for around two or three days per week.
A report in May found that the hybrid workplace strategies had resulted in residency rates within city offices barely moving this year. It discovered that about 58% of companies allowed employees to work some of the week from home - a setup that has been a problem in many US cities due to lost taxes.
Meta CEO Mark Zuckerberg has called 2023 the company's year of efficiency. The Facebook parent has laid off over 11,000 people and talked about reducing office space, making hybrid workers share desks much like Google - though the amount of money spent on protecting Zuckerberg and his family increased by $4 million to $14 million.
The FT writes that Meta has recorded $3.35 billion in restructuring costs related to facilities consolidation after starting its cost-cutting program in 2022. That makes its office-related costs such as early lease terminations the largest component of a scheme that has incurred $5.41 billion in restructuring charges so far.