Brief Summary
The tech industry is experiencing a significant transformation characterized by empty offices, mass layoffs, and a shift towards remote work and AI. This hollowing out of the tech sector is having profound consequences on major cities like San Francisco, impacting local economies, public finances, and the overall urban landscape. Companies are also redefining their management models, focusing on efficiency and cost reduction, which has led to the elimination of perks and a more depersonalized work environment.
- Tech companies are reducing their physical footprint and workforce.
- Remote work has become more prevalent, leading to lower office occupancy rates.
- Cities are facing budget deficits due to decreased tax revenue from commercial real estate.
Tech Offices
Tech offices are becoming increasingly empty, with nearly 30 million square feet vacated since 2023 due to the rise of remote work. This trend is contributing to a $20 trillion downturn in commercial real estate, particularly in the Bay Area. The situation is intensifying with the rise of AI and widespread layoffs, leading to significant problems for major American cities, a phenomenon described as the "urban doom loop." San Francisco, for example, has a commercial vacancy rate exceeding 34%, the highest in the country, coupled with a growing housing crisis.
Tech Vacancy
The tech industry's shift away from physical offices is causing major problems for big cities. Employee engagement in the tech sector has dropped significantly, from 38% to 27% in just five years. The once vibrant and innovative tech hubs are now marked by silence and vacancy as companies undergo a calculated retreat. Empty offices, closed cafeterias, and disintegrating corporate cultures are becoming the new norm.
Vacant Tech Space
Between 2022 and 2025, the tech sector has undergone a profound transformation characterized by mass layoffs, office sales, and a strategic shift toward AI. This has hollowed out the industry, replacing expansion and vibrant culture with reduction, distance, and silence. This transformation is redefining the identity of the tech industry and its role in the global economy.
Tech Campuses
More than 525,000 tech workers were laid off worldwide between January 2022 and June 2025, and the trend continues. In the United States alone, over 310,000 tech employees lost their jobs during this period, marking a labor contraction not seen since the dot-com crisis. Leading firms like Meta, Amazon, and Google spearheaded this restructuring, laying off hundreds of thousands of workers to readjust their structures following exponential growth during the pandemic.
Tech Job Cuts
The job cuts in the tech industry weren't limited to underperforming areas but reached key departments like recruitment, human resources, and engineering. For example, Meta eliminated nearly 50% of its recruitment team during the first two rounds of layoffs. This contraction directly impacted office occupancy, with entire floors shutting down or being subleased after once being bustling with activity.
Tech Workforce
As more Americans work from home, several US cities struggle to fill office spaces, making emptiness a visible reality across tech campuses. The reduction in the use of physical space is one of the most evident transformations of the tech hollowing out. While remote work was already common before the pandemic, its outbreak accelerated the widespread adoption of this model. In 2020, nearly 90% of tech workers in the US switched to working from home.
Office Occupancy
Despite expectations of a return to offices, it never fully materialized. By 2023, only 26% of tech employees in the US were going to the office three or more days a week. Office occupancy figures reflected this shift, with San Francisco at just 39% in the second quarter of 2023 and Seattle even lower at 33% at the beginning of 2024. This situation led companies to significantly reduce their real estate footprint.
Remote Tech Jobs
Tech companies are significantly reducing their real estate footprint. Meta canceled leases for 435,000 square feet of office space in Manhattan in 2023. Salesforce vacated or subleased more than 700,000 square feet in San Francisco between 2022 and 2024. The tech industry returned more than 30 million square feet of office space in the US since early 2022, representing an 18% drop in the total space occupied by tech companies nationwide.
Subleased Tech Space
This reduction in office space symbolizes a structural change in how companies understand work. Tech companies are not only reducing their physical spaces and headcounts but also redefining their management models. The focus has shifted from growth at all costs to doing more with less, driven by strong pressure from investors to cut costs. Meta declared 2023 its year of efficiency, while Google restructured departments to eliminate redundancies, and Amazon cut experimental initiatives.
Tech Job Market
The average tech company reduced its workforce by 12% compared to its 2021 peak but increased its revenue per employee by 19%, indicating leaner operations. Companies are also eliminating iconic perks of tech culture, such as free meals and social activities, contributing to a more distant and depersonalized work environment. The impact of this hollowing out extends beyond corporate walls, affecting entire cities and their local economies. San Francisco's commercial vacancy rate reached 34% in 2024, triggering ripple effects on small businesses and public finances, leading to budget deficits and potential long-term reductions in local GDP.
