Global tech companies' interest in expanding their national office footprints appears to have turned a post-pandemic corner.
From Silicon Valley to New York, some of the biggest names in the industry have renewed a push to operate as their own landlords as opposed to leasing space in buildings, closing some of the largest purchases so far since the pandemic and adding to the rebounding momentum for the United States office market.
Companies such as Apple, LinkedIn, Amazon and San Francisco-based financial technology firm LendingClub have in recent months collectively closed roughly $1 billion in deals, often taking advantage of the stressed office market by scooping up properties that otherwise may have been out of their financial reach.
Most recently, online betting company Bet365 dropped $135 million to acquire its Denver headquarters building, closing one of the city's most expensive office deals over the past half decade, according to CoStar data.
"Ownership was starting to become a strategic choice," said Phil Mobley, CoStar Group's national director of market analytics. "The pandemic interrupted that, but now they're returning to it."
Office sales volume nationally has dropped by more than 55% over the past year to $35 billion, according to CoStar data, a nearly 15-year low. However, sales volume picked up in the first half of the year when compared with year-earlier quarters as significant discounts pushed an expanding group of investors — in particular owner-occupiers that want to control their own spaces — to take advantage of more deals.
To be clear, tech firms aren't limiting their interest to office sales; they're leasing more space, too. In the first quarter of the year, U.S. tech office leasing rose 21% to 7.9 million square feet from a year earlier, according to Colin Yasukochi, executive director of CBRE’s Tech Insights Center. The tech industry took an 18% share of all U.S. office leasing in 2024, up from 14.2% in 2023, he said.
From tenant to landlord
London-based Bet365's purchase comes less than a year after it established its United States hub in the nearly 250,000-square-foot building at 1701 Platte St. in Denver, and its decision to own rather than continue to lease the space echoes moves made among other tech companies as they step in to fill some remaining gaps in the national office market.
The deal with Shorenstein Properties, the San Francisco-based seller and original developer of the five-story building, closed late last month for more than $542.60 per square foot. By comparison, other office purchases that have closed in the Denver area over the past year have collectively averaged roughly $385 a square foot, according to CoStar data.
Some discounted deals such as LendingClub's acquisition of its future San Francisco headquarters have also made the most economic sense, creating a runway for companies that otherwise wouldn't have been interested in scooping up their own properties.
"Under conservative assumptions, the purchase is economically comparable to leasing space in the San Francisco market with potential upside as leasing and property values recover in the Bay Area," Drew LaBenne, the fintech firm's chief financial officer, said at the time of the deal. "Not only is the transaction great for our brand and our employees, it makes great sense financially."
After years of lease terminations and a record burst of sublet listings, the recent spate of acquisitions is fueling optimism that some big tech companies are gradually reverting to office expansions following a prolonged period of significant real estate cuts.
Beyond the tech industry, owner-user sales have become increasingly popular in recent years, largely due to the mounting confidence among companies willing to commit to long-term investments as well as their interest in gaining more control over their real estate.
"There are a lot of benefits to controlling buildings you're occupying," Mobley said. "Companies can build out space how they want, manage expenses how they want and implement workplace tech, amenities, and services how they want."
Controlling their own stake
More telling of tech companies' rebounding interest in office real estate, however, is that many are still pursuing deals even as pricing begins to rebound back to pre-pandemic levels.
Apple, for example, within the span of a week shelled out nearly $520 million on office acquisitions in and around its decades-long hometown in Cupertino, California. The largest of those purchases was a $350 million deal for a two-building campus in a nearby Silicon Valley suburb. The deal transitioned the tech company from being the properties' sole occupant to its owner; all of the firm's transactions represented some of the largest and priciest deals to close in the tech-concentrated area since the beginning of the year, according to CoStar data.
With escalating return-to-office policies and anticipated head count growth, other tech giants such as LinkedIn and Amazon are gradually returning to the national office market landscape after years of dormancy.
LinkedIn, for example, closed a $75 million deal to purchase a 120,000-square-foot property in Sunnyvale, California. And Amazon paid $456 million to acquire the nearly 641,000-square-foot building at 522 Fifth Ave. near some of its other Manhattan hubs. The deal marked Amazon's first office purchase since 2020 and closed within weeks of the retail giant's 330,000-square-foot lease at 10 Bryant Park, one of New York City's largest leases this year.
All said, the purchases tech companies have closed in recent months have helped replace activity among larger institutional investors that have been slower to return to the capital markets.
Even with a nearly 40% jump in sales volume over the first quarter of this year, real estate investment trusts and larger firms continue to sell more properties than they're buying, Mobley said. And tech companies' renewed buying activity is helping to fill that absence.
"It's definitely fair to say these tech companies are filling a gap in the market that has been created by institutions being much less active on the buy side," he said. "While they were cutting overall footprints, they were consolidating from leased into owned space. Now that they're expanding, they're still showing a preference for owning."