- AT&T is conducting a strategic review of WarnerMedia’s 1.5 million-square-foot office headquarters at 30 Hudson Yards, sources told Business Insider.
- The reevaluation is expected to be complete early next year and could prompt the $200 billion telecom company to shed some of the space.
- If it decides to dump a portion of the headquarters, it would be the latest major tenant to back away from the office workplace.
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AT&T is reevaluating the huge New York City headquarters of WarnerMedia, multiple sources familiar with the company’s real-estate plans told Business Insider.
The process could result in a substantial downsizing of the 1.5 million square foot space at 30 Hudson Yards on Manhattan’s far West Side, where the mass media and entertainment conglomerate has both its own corporate offices and space for key subsidiaries such as HBO and production studios for the news network CNN.
A person directly involved in the evaluation warned that no decision had yet been reached to shed space. A spokesman for WarnerMedia, Jeff Cusson, told Business Insider that there were no current plans to downsize. A spokeswoman for AT&T declined to comment.
AT&T, however, is expected to complete its review of the space early next year, at which point it will decide whether to cast portions of the sprawling headquarters onto the market for sublease. It has hired the real-estate services firm CBRE to help it complete what it is calling a “strategic review” of the headquarters, sources with direct knowledge of the matter told Business Insider.
Several real-estate executives said that it was widely expected that AT&T would opt to cast off 400,000 square feet or more of the WarnerMedia space, nearly a third of the headquarters. One real-estate executive with direct knowledge of the space and WarnerMedia’s operations within it described the amount it could seek to dispose of as more modest, totaling around 150,000 square feet.
AT&T acquired WarnerMedia, then known as Time Warner, for $85.4 billion in June 2018. Massive corporate mergers often have real-estate implications as companies weed out redundancy and seek to integrate operations.
Amid the Covid-19 pandemic, however, AT&T’s decision to review its New York City footprint comes with additional intrigue. Several major space occupiers have stated that they will embrace remote work for longer periods than initially expected or as a permanent option for employees, potentially reducing their need for office space.
“There are definitely companies that are exploring whether they have excess space,” said David Falk, the New York area president of Newmark Knight Frank. “We all know that when you start doing something new, you fall into a pattern. Some employees have gotten comfortable working from home and when they go back to the office, it could be a hybrid model split between the office and remote work.”
Falk noted that other employees have been eager to return to the workplace.
AT&T, which is headquartered in Dallas, is also planning thousands of layoffs at WarnerMedia, according to a recent report in the Wall Street Journal, as the unit’s business has been battered by the virus crisis – another factor that could prompt it to trim the company’s footprint. The $200 billion telecom company’s CEO John Stankey has also said it will seek to cut billions of dollars of costs in the next three years.
Several companies have moved to downsize their space during the pandemic, an alarming sign to the real estate industry that tenants could be pulling back from the traditional patterns of work and could flood the commercial office leasing market with space at a time when demand has cratered.
Several tech companies have provided a counterpoint to the concerns, doubling down on the workplace, despite the uncertainties. Facebook, for instance, in August, signed a 730,000 square foot lease to take the office space in the Farley Building on Manhattan’s West Side. IBM, meanwhile, told Business Insider that it is pushing forward with its search for 500,000 square feet in which to consolidate several Manhattan offices.
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