LinkedIn has purchased a Silicon Valley building in a rare boost of optimism that some big tech companies are gradually reverting back to office expansions after years of severe real estate cuts.
The Microsoft-owned social media company closed a $74 million deal to purchase a 120,000-square-foot property in Sunnyvale, California, cementing its presence in the tech-concentrated hub.
Fellow tech company Synopsys was the seller in the deal for the building at 1022 W. Maude Ave., a property it purchased nearly seven years ago. The decision to sell was largely driven by Synopsys' evolving spatial requirements, part of a larger push by companies to adjust their post-pandemic real estate holdings. What's more, as office valuations in the tech-concentrated hub begin to gain steam, the timing of the deal lined up so the software company could take advantage of the rebounding market.
“We actively manage our real estate footprint based on market conditions and other factors," a Synopsys spokesperson said in a statement to CoStar News. That includes "pruning underutilized assets to drive value, which is the case here.”
LinkedIn, meanwhile, has been hot and cold with its real estate decisions since the pandemic's outbreak half a decade ago, offloading hundreds of thousands of square feet in some regions while closing blockbuster deals in others.
The company in late 2021 paid nearly $123 million for two office and research properties near its Silicon Valley corporate hub. In addition to purchasing the buildings at 810-820 and 870 Maude Ave. in Invesco and Harvest Properties' three-building Catalyst development project, LinkedIn finalized a lease for the entire 195,000-square-foot office building at 684 Maude Ave., the first building at the development, which broke ground in mid-2019.
About a year and a half later, however, LinkedIn sold its property at 880-888 W. Maude Ave. for $23 million, a price tag that underscored the dwindling valuations and a depressed sales climate that plagued the tech-concentrated area at the time of the mid-2023 deal. Later that same year it listed for sublease a more than 63,500-square-foot chunk of its corporate hub in downtown San Francisco, a move that coincided with the company's plan to implement another round of layoffs.
Hints of a rebound
While tech companies such as LinkedIn, Block, Salesforce, Meta, Amazon and Google have implemented widespread cuts to their previously vast real estate portfolios, the impact of those decisions has been most acute in the San Francisco and Silicon Valley areas, where many are headquartered and operate in a more concentrated amount of space.
After roughly a decade of fueling record-high spikes in rent growth and demand — often leasing up space before it was even built — tech giants in recent years have been making deep cuts to their property holdings by shutting office locations, subleasing out unwanted space and walking away from future investments.
Those decisions, which have also been fueled by significant job cuts and the push to redirect savings to higher-priority investments, have loaded up the Bay Area's real estate market with millions of square feet of available space that, with the absence of large tenants, has been challenging to fill.
While the market has stabilized somewhat, additional cuts made by both Meta and Google in recent weeks have shown that those downsizing days are far from over. That has made LinkedIn's latest acquisition especially notable given a landscape of terminated deals and sublet listings elsewhere.
Leasing activity across the tech-concentrated region has fallen to lows comparable to the Great Recession, fueling the vacancy rate to a record-high of about 15.5%, according to CoStar data. While the amount of sublease space has fallen, there is still more than 5.3 million square feet weighing down the market and further complicating any sense of a recovery.
Beyond Silicon Valley, a scattering of deals has pushed the growing sense of optimism that tech companies, after years of dormant leasing activity, are gradually returning to the national office landscape.
Among the 100 largest office deals to be signed nationally last year, tech companies accounted for about 30% of them, according to CBRE data, a share that filled about 9.3 million square feet. That figure was significantly higher than the roughly 10% share the industry had in 2024, which totaled about 3.6 million square feet.