Microsoft’s Strategic Downsizing and Campus Focus
The landscape of the Eastside office market is undergoing a significant transformation, led by key players like Microsoft. Historically a major driver of office demand with roughly 15 million square feet of owned and leased space, Microsoft is now strategically decommissioning much of its leased space, according to Q4 2023 Eastside Office Market Overview by Broderick Group. The technology giant has already vacated a large portion of its leased offices set to expire in the next two years, totaling about 2.7 million square feet across Bellevue CBD and the I-90 corridor. An additional 600,000 square feet at Millennium Corporate Park in East Redmond is currently on the market for sublease.
However, this move isn’t simply a reduction in footprint. Microsoft is concentrating on consolidating its workforce at the Redmond Campus, thereby fostering a more vibrant, centralized workplace. This consolidation aligns with their massive $5 billion renovation and expansion of the campus, although plans have been partially scaled back. Of the seventeen new buildings initially planned, five are being left unfinished, and four have been shelved. The project’s first phase is expected to commence in 2024. Additionally, Microsoft has sold a building on its campus and canceled the RedWest expansion, which would have added over 1.1 million square feet of office space.
Amazon’s Growing Presence and Commitment to Bellevue
In contrast to Microsoft’s consolidation, Amazon is affirming its commitment to the Eastside, particularly Bellevue. With over 11,000 employees already in Bellevue, Amazon aims to increase this number to 25,000. The company has embraced a hybrid work model, leading to increased occupancy at its Bellevue and Seattle facilities. This surge in activity is not only benefiting Amazon but is also having a positive impact on other businesses in the area, Broderick contends.
Amazon has committed to approximately 5.5 million square feet of office space in downtown Bellevue, with 4 million square feet already completed. Two major projects, The Artise and Bellevue 600 Phase I, are still under construction. Despite a temporary pause in tenant improvements to reassess headcount and office configurations, work has resumed, signaling continued growth and influence in Bellevue’s office market.
The Norm of Hybrid Work and Its Implications
The pandemic has reshaped the concept of the workplace, with hybrid work becoming the new norm. As a result, major Seattle area employers, including Amazon, Boeing, and others, are revising their remote work policies, favoring a hybrid approach. Hybrid models have shown lower employee turnover rates compared to fully remote setups, according to the report.
Today, Amazon, Google, Meta, T-Mobile, Apple and Expedia require their employees to be in the office at least three days per week. In December, Boeing declared a new policy mandating their corporate staff to be present in the office for a full five-day workweek. Microsoft stands as a notable exception in this trend, and it is the largest occupier in the Eastside.
Fueled by Amazon’s mandate on May 1st, 2023 for employees to return to the office, the occupancy of office space in Bellevue has seen a considerable rise, Broderick’s report indicates. This trend reflects a growing confidence among technology firms in their capacity to encourage a greater number of employees to work from the office. Although remote work will continue to be prevalent among some tech companies, the hybrid model has become the standard practice, with employees typically coming into the office for at least three days each week.
