Meta (formerly Facebook) recently informed its employees that it would leave its offices in the Azrieli Sarona Tower in Tel Aviv in 2025, when the lease with Azrieli Group (TASE: AZRG) ends. The company will also take less space when it moves to the nearby Landmark TLV Tower: instead of moving to the twenty floors that it leased from Melisron (TASE: MLSR) and AFI Properties Ltd. (TASE: AFPR), it will take up thirteen floors only, and will sublet the rest.
On the face of it, this still represents expansion. The floors in the Landmark Tower are larger, and thirteen floors means total space of 33,100 square meters, which compares with 29,000 square meters that Meta currently occupies in the Azrieli Sarona Tower, but the announcement indicates a substantial reduction in the space that Meta intends to occupy in the future.
First of all, giving up seven out of twenty floors is certainly significant. It amounts to 18,000 square meters for which Meta will need to find other tenants. Secondly, until now Meta had not said that it intended to relinquish the office space in the Sarona Tower, and it was assumed that it would hold both premises at the same time. Various sources even said that Meta initially sought to expand in the Sarona Tower itself, but when it realized that not enough space was available, it decided to rent the offices in the Landmark TLV Tower.
The notification to the employees apparently came because of the approaching end date of the lease from Azrieli Group on the present offices. As "Globes" reported in the past, the company started to examine its leases a year ago, with a view to reducing the space that it occupies. Meta recently announced layoffs of 10,000 people around the world, including in Israel. The layoffs began in April this year. Meta also has offices in the Rothschild 22 Tower, where its sales and service departments for Israeli customers are located (Meta Israel). No change is planned there at the moment.
Meta’s exit from the Azriel Tower means that Azrieli Group will need to find tenants for twelve floors in the tower that will become vacant in two years’ time, although market sources say that demand for space in the tower is very high, and that the company will have no difficulty in finding replacement tenants. Several other companies have recently left the tower. One of them was web analytics company Similarweb (NYSE: SMWB), but that was because of a legal dispute with the Tel Aviv-Yafo municipality over arnona (local property tax).
Published by Globes, Israel business news - en.globes.co.il - on June 21, 2023.
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