Like many of their counterparts across the technology industry, Microsoft and Facebook workers won’t be returning to cubicles any time soon, but both companies say they remain committed to previously announced plans to add office space at Reston Town Center.
Microsoft announced in a corporate blog post on Thursday (Sept. 9) that it has scrapped plans to fully reopen its California headquarters and other U.S. offices on Oct. 4, citing the continued uncertainty of COVID-19, particularly with the spread of the Delta variant.
“Protecting employee health and safety continues to be our top priority and we’ve decided to adjust our plans as we follow the latest information and guidance from health and data experts, and respond to COVID-19’s highly dynamic nature,” a Microsoft spokesperson said in a statement.
A presence in Reston since 2002, Microsoft currently occupies a 153,000 square-foot office in Two Discovery Square at 12012 Sunset Hills Road.
The company told Reston Now that it doesn’t disclose worker headcounts by location, but nationwide, the decision to indefinitely postpone its office reopening plans affects more than 103,000 employees, according to NBC4.
“We will fully re-open each U.S. worksite once our Stage 6 health and criteria and local guidelines are met at each location,” the Microsoft spokesperson said by email. “At that point, we’ll communicate a 30-day transition period that provides time for employees to return to the work site.”
Microsoft announced in May 2020 that it will lease 400,000 square feet of office space in Two Freedom Square (11955 Freedom Drive) at Reston Town Center to build a research and development hub, which is expected to create 1,500 jobs and feature a new retail space.
The Washington Business Journal reported in November that Microsoft had reached a deal with Reston Town Center owner Boston Properties to expand its Sunset Hills office by 45,000 square feet in addition to the development facility plans.
While Microsoft didn’t move into Two Freedom Square this summer as initially expected, the company says its plans for a Reston Town Center expansion have not changed.
“Our expansion in Reston fulfills long-term business needs that we don’t anticipate shifting due to the current COVID-19 environment,” Microsoft said.
Facebook likewise confirmed that it still plans to set up a Reston office, even after announcing on Aug. 12 that U.S. employees won’t be required to return to offices until January.
Boston Properties shared in an earnings call on Oct. 31, 2019 that the social media giant had signed a lease for about 75,000 square feet of space at Reston Town Center, which beat out a Tysons office tower that was reportedly also under consideration.
The address of the new office wasn’t disclosed, but a permit issued by Fairfax County on March 17, 2020 indicated that Facebook will occupy the 10th floor of 1818 Library Street, which counts Carr Workplaces and the scientific consulting firm Metron as tenants.
More recently, Fairfax County issued a non-residential use permit to Facebook for the Reston Town Center space on July 8.
“We’re eager to continue expanding to support Facebook’s growing teams, and be a part of Reston’s vibrant community and strong business economy,” Facebook spokesperson Jamila Reeves said in a statement. “We always have our eye on new opportunities to support employees in the region.”
Facebook did not return follow-up inquiries about a move-in timeline and the number of employees that will work at the Reston office by press time.
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Microsoft Corp. plans to expand with about 45,000 square feet in Reston Town Center, according to a recent earnings call by landlord Boston Properties.
The expansion is an addition to the 400,000-square-foot tech hub that is planned for the development.
Here’s more from the Washington Business Journal on the expansion:
The new space adds to what Redwood, Washington-based Microsoft is already leasing at Two Discovery Square, which stands at 12012 Sunset Hills Road. It’s also separately establishing a tech hub at Two Freedom Square, at 11955 Freedom Drive, bringing its total footprint across those two buildings to above 600,000 square feet, according to earnings data and company officials familiar with the situation.
In late May, Microsoft announced that it would invest $64 million to establish a new tub hub that would bring 2,500 new jobs to the area.
Photo by Franck V./Unsplash
Boston Properties, owner of Reston Town Center, held its Third Quarterly Earnings Call earlier this week where the current state and future of Boston Properties in Reston were discussed.
Chief Executive Officer Owen Thomas says Boston Properties (BXP) has performed well, despite the pandemic.
“Despite a challenging recessionary environment, BXP continued to perform well in the third quarter, demonstrating the durability of our business,” Thomas explained. “In the quarter, we collected 99% of our office rents and 97% of rents overall. We completed 811,000 square feet of leasing, 40% being either new requirements or expanding existing customers, and we increased our average net rental rates on our second-generation leases by 20%.”
BXP properties that have recently been sold was also discussed, including Patriots Park in Reston that was sold for $325 million, according to Thomas, or what equals out to $450 a square foot and a 5.6 cap rate.
“This 724,000 square-foot asset is fully leased and sold to an asset management company,” Thomas said. “BXP built and subsequently sold Patriots Park in 2014 at roughly the same valuation.”
President of BXP Douge Linde later chimed in to discuss leasing activity around the country. Northern Virginia is the second market that relaxed its restrictions since the start of the pandemic, following Massachusetts, according to Linde.
“In Northern Virginia companies are actually required just to social distance and there are no limits to the occupancy threshold, and employees drive to their office,” Linde said. “We estimate our census is well under 15%. At this time, the return to work is not about transportation constraints, and it’s not about elevator constraints either.”
BXP also finalized a few leases in Northern Virginia, according to Linde, including Microsoft in Reston Town Center.
“They leased an additional 45,000 square feet and extended the 2028 expiration on 164,000 square feet to 2033,” Linde said. “We’ve also completed another 96,000 square foot of leases, 8 transactions during the quarter there. We are in negotiation on 5 more leases, totaling 65,000 square feet, for vacant space in the Town Center.”
Restonians should expect to see Volkswagon in Reston as BXP recently signed a 20-year lease with the company.
The future of BXP in Reston was also discussed by Chief Financial Officer Mike LaBelle.
“We’ve already signed leases for this space in Reston, and we expect it to be occupied in 2021,” LaBelle explained. “We partially offset the impact of the occupancy decline with revenue growth from a full quarter of contribution from our 100% leased 1750 Presidents Way development in Reston that we delivered in the second quarter, and $2 million of growth in our parking revenues.”
Staff photo by Jay Westcott
Boston Properties, the owner of Reston Town Center, has taken a hit in earnings since the COVID-19 pandemic impacted the regional economy.
According to a quarterly earnings statement, the real estate owner’s funds from operations were down by 14 percent in the second quarter this year when compared to this time last year. The company earned $236.9 million for the first three months ending on June 30.
Boston Properties CEO Owen Thomas attributed the earnings drop to layoffs, rent concessions with struggling tenants, and dips in parking fees from office tenants that are now working remotely.
Still, the company reported some big wins. Earlier this year and in the thick of the pandemic, Microsoft signed a 400,000-square-foot-lease in Reston Town Center.
It’s unclear how the pandemic will pan out for the company. Rent collections remain high, with collections of 94 percent of rents overall, Thomas said.
“I’m particularly proud of our team’s commitment to serving our customers with the highest level of professionalism that is our standard at Boston Properties,” he said.
He also noted that greater acceptance of part-time work from home may act as a headwind to office demand growth.
“So longterm, we think the product is here to stay. And the question is, who is going to be providing that and who is going to get through this pandemic most successfully?”
Photo by Jay Westcott
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Photo via Marjorie Copson
Walmart Labs is expanding its presence in the Reston area. The announcement comes as a growing number of technologies — including Microsoft — expand their footprint in the community.
The company’s technology arm has signed to lease establish a new technology center at 2245 Monroe Street, according to the Washington Business Journal.
WBJ also reports that the company will take up roughly 162,300 square-feet of a building owned by an affiliate of Barings Real Estate.
The building, which is located near the Herndon Metro Station, was recently renovated. The company already leases spaces at 10780 Parkridge in Reston.
The move would bring more than 100 jobs to Reston.
Photo courtesy Transwestern
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Photo by Marjorie Copson