Facebook buying REI's headquarters indicates demand remains for offices

The social media networking company bought the building in a Seattle suburb for $368 million this week

Recreational Equipment Inc. (REI) corporate campus, sold to Facebook Inc., in Bellevue, Washington, U.S., on Monday, Sept. 14, 2020. REI Co-op announced today that it has completed the sale of its newly completed corporate campus in the Spring District neighborhood of Bellevue, Washington, for a purchase price of $390 million to Facebook. Photographer: Chona Kasinger/Bloomberg
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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 for long.

On Monday, Facebook bought it for $368 million (Dh1.3 billion), delivering a profit to REI and adding to a trio of buildings the social media giant has already leased nearby.

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.

It also shows the wide variation among employers as they weigh their future real estate needs, said Greg Johnson, president of Wright Runstad, which developed the headquarters as part of its Spring District in Bellevue. Wright Runstad bought an undeveloped two acres from REI as part of the deal for $22m.

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”, Mr Johnson said. “Everything in between is going on, as well.”

Facebook chief executive Mark Zuckerberg projected earlier this year that as much as half of 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.

Mr Johnson remains bullish about office demand, especially in the Seattle area where large, expanding companies like Amazon and Microsoft 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 area of its latest purchase.

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