Facebook Buys REI's Elaborate New Headquarters as Covid-19 Pandemic Prompts a Sale
September 14 2020 - 7:28PM
Dow Jones News
By Peter Grant
Facebook Inc. is buying Recreational Equipment Inc.'s
custom-made new headquarters near Seattle, the latest sign that big
technology companies are driving commercial real estate markets
during the coronavirus pandemic.
The outdoor clothing and gear retailer, known as REI, had been
planning to occupy the 400,000 square foot campus in Bellevue,
Wash., this summer. REI designed the elaborate complex to reflect
its outdoorsy image, and the company once hoped it would serve as a
way to recruit new employees. The property features outdoor
staircases and bridges, a courtyard of native plants, and skylights
to let in sunshine and air.
But REI never occupied it because of the pandemic, opting
instead to cash out while employees work remotely from home or a
number of smaller offices in the region.
Both companies announced the deal Monday. Facebook is paying
$367.6 million. REI also sold undeveloped land on the property to
the developer Wright Runstad & Co., for a total sale price of
$390 million.
Technology companies like Facebook, Google and Amazon.com Inc.
have been among the most reticent businesses to reopen their
offices due to fear of Covid-19 contagion. But, at the same time,
their appetite for real estate shows little sign of abating from
what it was before the pandemic.
The Seattle area has become Facebook's largest engineering hub
outside its Menlo Park, Calif., headquarters. With the REI deal,
Facebook now has more than 3 million square feet of space in the
region, according to Vijaye Raji, head of Facebook's Seattle
office.
The REI property is located next to three other Facebook
buildings all under development in Bellevue's Spring District. Mr.
Raji said Facebook particularly likes that area because of its
large pool of engineering talent and "future as a transit hub."
In New York, Facebook recently agreed to lease the entire
730,000 square feet of office space in the historic James A. Farley
Building, formerly the city's main post office. And this summer,
Amazon said it expects to create 2,000 jobs in Manhattan and open a
630,000 square foot office in the Lord & Taylor building, which
it purchased in the spring.
REI's business has suffered recently as the company closed
stores during the height of the pandemic. By selling the new
headquarters, the company has more cash for other parts of the
business.
REI, which is structured as a cooperative in which anyone can
purchase a membership for $20, said that the sale price was above
what it invested in the property and that the proceeds will help it
meet its carbon reduction goals and other uses.
The campus sale was a high-profile example of how the pandemic
is affecting businesses' long-term workplace plans. Some companies
are jettisoning plans for large centralized offices partly to save
cash.
Others are considering strategies based on remote working from
satellite sites.
"Heads of workplace at these big businesses are hard at work
figuring out what this all means," said Jamie Hodari, chief
executive and co-founder of Industrious, a startup workplace firm.
"But other than REI and a few others, not a lot have said, OK we
crafted the plan, now it's happening."
(END) Dow Jones Newswires
September 14, 2020 19:13 ET (23:13 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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