Big Tech is bucking two big workforce trends. Amazon, Facebook, Apple and Google are all scooping up New York City commercial real estate after prices have plummeted due to the fallout from the Covid-19 pandemic. The companies are making a bold contrarian bet that Manhattan will bounce back and there will still be a need for people to work in offices.
According to the New York Times, Facebook leased enough space in the city to triple the amount of people that can work in New York. Apple, which has been in the city for at least a decade, plans to expand its footprint there. Google and Amazon are snatching up space in New York—greater than any other place in the U.S. Amazon recently paid about $1 billion to acquire the Lord & Taylor flagship building in Midtown Manhattan from WeWork. Collectively, the tech behemoths can accommodate over 20,000 workers.
After seven months of remote work, it seems that both employees and employers are seeking a balance and options. Alphabet CEO Sundar Pichai said in an interview at the TIME100 Honorees: Visions for the Future event, the company will be more “flexible” with its workers and offer a “hybrid” model that will include a blend of both remote and in-office methods of working.
Pichai, who was recognized by TIME as one of the world’s most influential people, acknowledged that his employees have distinct needs, as it relates to their work style and preferences, stating, “We firmly believe that in-person, being together, having a sense of community is super important when you have to solve hard problems and create something new so we don’t see that changing. But we do think we need to create more flexibility and more hybrid models.”
For a while, it seemed that the remote-work trend would become the dominant new business standard, but recent events—such as the leasing of New York City properties—reflect some pushback. Major high-profile companies have started calling for their people to return to the office. Top-tier investment bank JPMorgan, led by well-respected CEO Jamie Dimon, required its traders, bankers, brokers and research analysts to return to its offices by Sept. 21, after being allowed to work from home for the last six months. Netflix cofounder and co-CEO Reed Hastings said in an interview with the Wall Street Journal about remote work, “No. I don’t see any positives.” Hastings added, “Not being able to get together in person, particularly internationally, is a pure negative.” He said that he’d expect his 8,600 employees to return to the office “12 hours after a vaccine is approved.”
Despite predictions of New York’s demise, tech-related companies, including startups, have been steadily gravitating to the Big Apple. They appreciate the deep pool of talent to draw from. The city offers a unique culture, diversity and energy that can’t be found in many other places. Ruth Porat, Google’s CFO said, “New York City continues to be a great source of diverse, world-class talent—that’s what brought Google to the city in 2000, and that’s what keeps us here.” Julie Samuels, executive director of Tech:NYC, explained the trend, “For a long time, if you lived in the broader tech sector, there was inertia that brought you to Silicon Valley.” For a time, there weren’t other options until fairly recently. “So many people wanted to live here and move here, but felt the jobs weren’t here. Now the jobs are here.”
Tech jobs in New York City have boomed by about 80% over the last 10 years—from about 79,000 in 2009 to 142,600, according to the city statistics. Smaller companies are opening their offices as well, with roughly $27 billion deployed to startups, catching up a little with San Francisco.
There have been dire assertions of New York’s fall from grace. Reports reflect residents fleeing to suburbs and other other states as a refuge from the outbreak and the strict draconian restrictions placed on entertainment venues, restaurants, bars, clubs, cultural events and businesses. This severely reduced the social and nightlife, which was a big draw for many people. The loss of jobs, coupled with high taxes and rents, made people consider other options.
The new jobs added by the tech companies could potentially turn New York’s fortunes around. More well-paid people will be in the city. They’ll frequent the shops and stores that are still open, bringing in much needed revenue. In turn, this could attract other companies to seek out prime real estate at a reduced rate. This could certainly contribute in a meaningful way toward turning around the declining city.