Facebook’s parent organisation, Meta, has spent £149m to terminate its lease at 1 Triton Square, a prominent London office near Regent’s Park, as the company adapts to its staff’s work-from-home practices. This decision led the firm to compensate British Land, the landlord, with a break fee that equates to about seven years of rent.
Meta’s departure from this eight-storey building, spanning approximately 310,000 sq ft in London’s central region, caught analysts’ attention. BNP Paribas Exane specialists commented that the company had parted with a “significant surrender premium” for this prime real estate. Notably, Meta had a remaining lease term of 18 years on this unoccupied building, which was sublet in 2021 following substantial renovations. However, they still operate from a different establishment on Brock Street.
This exit aligns with Meta’s broader approach to office spaces, emphasising shared work areas and hot-desking, following its new hybrid working model. Mark Zuckerberg, the company’s founder, introduced an efficiency mandate, modifying previous teleworking guidelines. Starting this month, employees are required to be present at designated offices thrice weekly. Non-compliance could lead to potential job losses, as indicated by a notice from Meta’s human resources in August.
The company’s pivot towards a reduced London physical presence not only mirrors the post-COVID-19 inclination towards flexible work arrangements but is also consistent with numerous redundancies within Meta’s UK operations in the last year. A company spokesperson emphasised Meta’s continued commitment to London, highlighting the recent inauguration of their Kings Cross office, which further solidifies their presence in the city.
British Land’s CEO, Simon Carter, remarked that Meta leaving 1 Triton Square paves the way for its transformation into an “innovation and life sciences campus”. There’s optimism in the air, as BNP Paribas analysts speculate that British Land might enjoy enhanced rental income if they manage to re-lease the property at a higher rate, given the rise in London rents.
In a broader perspective, Colm Lauder from Goodbody noted that Meta has relinquished around 1 million sq ft of London office space in under twelve months. They also triggered a break clause in Dublin and sublet another building there.
This shift isn’t isolated to Meta. Other tech companies are re-evaluating their workspace requirements due to industry-wide cost-saving measures. Earlier in the year, The Telegraph reported a settled legal dispute involving Twitter and the Crown Estate concerning Aire Street office rent. The social media firm confirmed in its UK filings the discontinuation of an office space worth £38.9m.
Furthermore, Google’s parent entity, Alphabet, registered charges amounting to $663m (£545m) during the first half of 2023 for global office space optimisation. This move by Meta aligns with a growing trend where other tech leaders, such as Amazon and Google, are facilitating remote work.
This shift has impacted the London office market, causing a roughly 20% value drop in the past year, based on BNP Paribas data. Research by Stanford, Chicago universities, and ITAM reveals that the typical UK worker telecommutes about 1.5 days a week. In contrast, IT and tech professionals in the country spend around half their working week at home. This starkly contrasts sectors like retail, transport, and hospitality, where the average worker might only work remotely less than one day weekly.