Facebook Buys REI Headquarters, Showing Life for Offices

Facebook Buys REI’s HQ, Showing There’s Life for Office Demand

Outdoor sporting goods retailer REI surprised the real estate world last month when it put its never-been-used headquarters in a Seattle suburb up for sale, a striking example of how the pandemic is reshaping office demand.

The property didn’t sit around long.

On Monday, Facebook Inc. bought it for $368 million, delivering a profit to REI and adding to a trio of buildings the social media giant has already leased nearby.

Facebook Buys REI Headquarters, Showing Life for Offices

The quick listing and sale highlights the topsy-turvy nature of commercial-property markets six months after Covid-19 forced people to work from home, leaving skyscrapers and office parks vacant from New York to San Francisco.

It also shows the wide variation among employers as they weigh their future real estate needs, said Greg Johnson, chief executive officer of Wright Runstad & Co., which developed the headquarters as part of its Spring District in Bellevue. Wright Runstad and San Francisco-based Shorenstein bought an undeveloped 2 acres from REI as part of the deal for $22 million.

While REI chose to scatter workers across multiple sites, Facebook “has said we’re hiring like crazy and we want to have places for people to sit in close proximity,” Johnson said. “Everything in between is going on, as well.”

Facebook CEO Mark Zuckerberg projected earlier this year that as much as half his company’s employees would work remotely in the next decade, which many real estate investors took as a bearish omen for the industry. But since then, Facebook announced a major lease in New York, a clear sign that it still wants physical offices for employees to gather and collaborate.

Johnson remains bullish about office demand, especially in the Seattle area where large, expanding companies like Inc. and Microsoft Corp. are based. Facebook, which first opened a Seattle office in 2010 with three engineers, now has more than 3 million square feet of commercial space in the greater Puget Sound area.

“There are growing employers in this region and they continue hiring,” said Johnson. “And, with hiring, that drives demand for residential and office space.”

©2020 Bloomberg L.P.

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