The Silicon Valley commercial real estate market heard a loud ‘tudum’ chime today. It came from Los Gatos where media streaming giant Netflix is headquartered, and where two buildings in its corporate headquarters campus have just hit the sublease market. In all, Netflix is offering for sublease 164,067 square feet across two buildings located at 100 and 150 Winchester Circle. The two Sobrato Organization properties are marketed by JLL’s Silicon Valley team led by Scott Mathisen, Toss Vallentine and Clarissa Richardson, according to the company’s flyer.
The 100 Winchester Circle building, which was the company’s headquarters office at one point, is a three-story property with each floor totaling 27,113 square feet for a total of 81,339 square feet. The building located at 150 Winchester Circle has slightly bigger floor plates at 27,567 square feet for a total of 82,728 square feet for the entire property. In JLL’s flyer, each property can subdivide the building for as little as one of the floors, and the buildings can be subleased on their own.
Netflix has called Los Gatos home since its founding, and the Sobrato Organization just renewed the leases in both buildings a couple of years ago. The sublease in the property is available until November 30, 2027, according to JLL. One of the building’s flyers indicates that each floor can hold up to 270 desks, which means roughly 1,620 employees could work there under that assumption.
100 Winchester Circle is available for October 1, 2022 occupancy, while 150 Winchester is available today, JLL’s flyer states.
These two buildings are part of the bigger Netflix campus, which spans across a number of additional buildings in Los Gatos. These are the only two buildings on the north side of State Route 85. Most of the campus is located just south of the highway along Winchester Blvd.
The streaming media company has been fighting to curtail spending with a sharp drop in subscriber numbers over the last couple of quarters and tougher economic times taking a toll on its core source of revenue—monthly subscriptions. To add to its woes, Netflix has had to deal with competitive streaming services from Disney, Hulu and Amazon Prime, all taking chunks of share in an industry that was championed by the Silicon Valley company.
In addition, the company is likely evaluating the need for office space given the evolving trends affecting where employees perform their daily work. Other technology stalwarts have taken a stand toward innovation and have considered office space “an anachronistic form” that was “from a pre-digital age,” according to an interview with Brian Chesky, Airbnb’s CEO who announced earlier this year that all of his employees can work from home forever. “I think that the office as we know it, is over,” he told Time Magazine in May. “We can’t try to hold on to 2019 any more than 1950. We have to move forward.”
Other media outlets have been questioning if remote work can survive now that power seems to be shifting toward employers. In an article by Forbes published this month, a hypothesis is raised about the impact layoffs will have on employee perks, such as working from home, although flexible work arrangements seem to be recommended. In either case, companies are looking closely at their office space needs and determining where they will need office space, how it will be utilized, by whom and to what extent.
The news of Netflix looking to reduce its office footprint comes on the heels of another similar announcement. Twitter, which was planning to lease 66,000 square feet in Oakland from TMG Partners and KKR, announced that it will not be occupying this property and that it was further evaluating its offices across the globe. “We are evaluating our global office portfolio and re-sizing certain locations based on utilization,” Twitter said in a statement, which The Registry reported in July of this year. “We’ve proven we can operate our business successfully with a distributed workforce over the years, and remain committed to our employees, our customers, and the markets we serve. These decisions do not impact our current headcount or employee roles.”
Twitter is now looking to close its office in Sydney, Australia while also planning to close several other office spaces once leases expire. These include offices in Seoul; Wellington, New Zealand; Osaka, Japan; Madrid; Hamburg, Germany; and Utrecht, The Netherlands. The company may find alternative office space in some of these cities. Along with this, corporate space in other cities will be shrunk, this includes offices in Tokyo, Mumbai, New Delhi, Dublin and New York. The company stated that it isn’t planning to cut jobs.