Meta Pulls Back on Anchoring Austin's Tallest Building

With its stock price collapsing in recent weeks as Mark Zuckerberg implores investors to patiently await the dawning of the Metaverse—losing almost three-quarters of its value and putting an estimated $71B dent in Zuckerberg’s personal e-wallet—social media giant Meta continues to shrink its national office footprint.

The Facebook parent has announced it will not occupy a 589K SF lease it signed in January for all of the office space in what will become Austin’s tallest building when it opens next year, a 1.14M, 66-story mixed-use tower at 400 West Sixth Street being developed by Lincoln Property.

Meta, which has said it is “evaluating” its real estate portfolio globally, will sublease the space in the Austin tower. Meta had promised to take the first 33 floors of the new building, which will feature 349 apartments in its top half, as well as 10K of ground-floor retail.

The company did not indicate whether it will downsize its footprint—estimated to total more than 700K SF—in three other office buildings in the Austin Metro.

The anchor tenant deal in Austin is the largest of several hefty lease agreements the tech giant has backed away from in recent weeks.

At the beginning of October, Meta said it was terminating its 200K SF office lease at 225 Park Ave. South in Manhattan, a space the company had occupied since 2016.

In announcing that it was exercising its option to terminate its lease with Orda Management for space in the Park Ave. building, Meta positioned the move as a consolidation that prepares the way for the company to move into more than 2M SF of new office space in new developments at Hudson Yards and the Farley Post Office Building.

But other recent moves reflect a hasty restructuring of Meta’s footprint: over the summer, Meta backed out of a 300K SF deal to expand its office space into Vornado Realty Trust’s 770 Broadway; the company also put plans to build out the 1.5M SF across 30 floors in Hudson Yards on hold.

The tower known as Sixth and Guadalupe is poised to be first skyscraper in Austin that encompasses more than $1M SF. Construction of the office portion of the building—the space that Meta was supposed to occupy—was completed in 2021; the residential top half is expected to be finished next year.

Lincoln is developing the tower in partnership with San Antonio’s Kairoi Residential and Divco West Real Estate Services, a San Francisco-based firm.

Two announcements at the beginning of the year had economic development officials in Austin hoping to cement the Texas capital’s reputation as the leading US tech hub: Meta’s deal to anchor the West Sixth Street tower and Google’s 732K SF pre-lease in a high-rise under construction at 601 West Second Street.

As of now, only the Google deal will result in a tech giant anchoring an Austin skyscraper.