Login

Microsoft Adds to Tech Sector Layoffs With 10,000 Jobs Cuts, Many in Seattle Regional Offices

Along with Amazon, Greater Seattle’s Two Largest Office Occupiers Now Plan To Shed a Combined 28,000 Jobs
Microsoft plans to lay off employees across greater Seattle, including downtown Bellevue. (John Othic/CoStar)
Microsoft plans to lay off employees across greater Seattle, including downtown Bellevue. (John Othic/CoStar)

Microsoft is the latest technology giant to announce massive layoffs as the industry scales back pandemic-era staffing and real estate expansion and braces for declining revenue growth in a slowing economy.

The company based in Redmond, Washington, one of the largest U.S. corporations by total revenue, will cut 10,000 jobs — nearly 5% of its workforce — by the end of September and consolidate real estate leases "to create higher density across our workspaces," according to a company filing.

Microsoft informed state officials Wednesday about the first round of cutbacks, with 878 employees permanently losing their jobs starting on March 20 across the company’s headquarters and facilities in Bellevue and Issaquah in greater Seattle, according to a Washington Worker Adjustment and Retraining Notification, also known as WARN.

The cuts by Microsoft, greater Seattle's second-largest office occupier, come less than two weeks after Amazon, the region's largest office user, said it will increase its planned layoffs to 18,000 from 10,000 as a result of the slowing economy and rapid hiring during the pandemic.

The layoffs add to mounting uncertainty across the technology industry that has caused several other big companies, including Meta, LinkedIn, Google and Apple, to either freeze hiring, walk back remote work policies or cancel plans to expand their real estate portfolios from Silicon Valley and Seattle to New York in the face of a sudden slowdown after the pandemic growth spurt.

"First, as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less," CEO Satya Nadella said in a letter to Microsoft employees included in the filing. "We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one."

Seattle's Office Challenges

Microsoft occupied nearly 13.2 million square feet of offices in greater Seattle as of July, second only to Amazon’s more than 16.2 million square feet, Elliott Krivenko, CoStar's director of market analytics in Seattle, said in an email. Facebook parent company Meta is a distant third with under 2 million square feet occupied, followed closely by Google with 1.8 million square feet and aircraft giant Boeing with just under 1.7 million square feet.

Microsoft, scheduled to report its latest financial results next week, did not provide details Wednesday about where it intends to reduce its leased space. However, the corporation revealed last summer that it wouldn't renew its 585,000-square-foot lease set to expire this September at 3007 160th Ave. SE in an office park south of Bellevue, a move that raised questions about the other major leases in greater Seattle.

The company is giving up most of its leased space in downtown Bellevue, which accounts for about 10% of the existing space in the district, Krivenko said.

"Bellevue’s downtown had been one of the best-performing office nodes in the nation recently but Microsoft’s announcements and Amazon’s recent slowdown are creating new headwinds there," Krivenko said. "While Microsoft’s lease expirations are for space in more established buildings, we are even seeing companies give back space that they have yet to physically occupy. Amazon has not yet announced any reduction in space, but it would not be surprising given the company’s layoff announcements."

While Microsoft is giving up most of its leased space over the next couple of years, the company’s expansion of its main headquarters campus in Redmond means it will occupy about the same square footage as it does now. The major remodel and expansion in Redmond will bring roughly 2.5 million square feet of new space starting this year.

Microsoft's last major layoff in the area was in late 2014, when the company announced 635 job cuts in Redmond, according to state WARN data.

The cutbacks also raise questions about Microsoft's planned expansion projects across the country.

The company planned to develop a large corporate campus in Atlanta on a 90-acre site near Georgia Tech. Last year, it hired JLL as program manager and Cooper Carry as architect for the development.

But Microsoft has not started construction or provided a timetable for opening the Atlanta campus.

The company acquired the Atlanta property, previously owned by a partnership that included former Major League Baseball Atlanta Braves slugger Mark Teixeira, in 2021 for $127 million.

Microsoft already has a major Atlanta office presence. It leases two buildings, covering about 524,000 square feet, at 170 17th St NW and 200 17th St NW for cloud computing and artificial intelligence teams.

Private equity firm KKR acquired both properties last year for $385 million in one of Atlanta’s top office deals for 2022.

IN THIS ARTICLE