Silicon Valley engineering outposts have added an interesting dynamic to Seattle’s burgeoning tech community over the past 15 years. More than 125 of these centers now operate from Bellevue to Belltown, representing thousands of tech workers at companies such as Apple, eBay, HBO, Oracle and Sonos, according to GeekWire data.
But in the era of COVID-19 — with layoffs hitting tech companies and office expansion cooling — the future of at least some of these outposts as an engine for tech job growth is uncertain.
This is especially the case as hard hit companies like Uber, Lyft, Compass and Airbnb — all of which have expanded to Seattle in recent years — cut workforces.
- Earlier this week, Uber laid off 3,700 employees, or 14% of its staff, citing decreased trip volume. The company was one of the first Silicon Valley giants to establish a Seattle-area engineering center and employed 450 people in the region last year.
- Ride-hailing rival Lyft slashed 17% of its workforce last week; it landed in Seattle five years ago and expanded its presence in 2017. Lyft and Uber are cutting expenses as fewer people need rides while cities around the globe shut down.
- With travel on hold, Airbnb laid off about 25% of its employees this week. The hospitality company had been growing its Seattle footprint over the past few years and inked a lease for a 58,300 square feet space in downtown Seattle earlier this year.
- Heavily-funded New York-based real estate brokerage Compass laid off 15% of its staff, or about 375 employees, in March. The company opened a large new Seattle tech center this past September, right in the middle of Amazon’s headquarters campus in the South Lake Union neighborhood.
When contacted by GeekWire this week, representatives for Lyft, Uber, and Airbnb declined to comment on the impact of layoffs on their Seattle operations. Compass also declined to provide details on the number of Seattle-specific cuts.
Google, which sparked the Silicon Valley influx in the Seattle region 15 years ago and now has about 4,500 employees in the area, said it would “significantly slow down the pace of hiring” across the company this year. Facebook, with more than 5,000 Seattle-area workers, still plans to hire an additional 10,000 people this year.
If the engineering centers pull back on hiring, it may weaken the tech talent pipeline coming into Seattle and stunt the growth of the region’s tech ecosystem more broadly. It also could allow some opportunistic companies — those who are accelerating their offerings and benefitting from the pandemic — to expand.
GeekWire reported Thursday on companies that are still hiring despite the economic downturn, taking advantage of an influx of recently-laid off tech workers.
There may also be implications for Seattle’s startup scene. An ongoing concern has been that the Silicon Valley giants could prevent Seattle from realizing its potential as a startup hotbed, keeping talent away from promising upstarts that can’t match the high salaries and generous benefits offered at the powerhouses.
However, the engineering centers also serve as a launchpad for budding entrepreneurs who can gain valuable experience before launching their own Seattle-based startups.
With some of the well-funded out-of-town companies slowing growth, it could hurt the region’s commercial real estate market. Brian Biege and Matt Walters of real estate firm CBRE say it’s too early to tell how the layoffs will affect engineering center expansion in Seattle.
“There is still plenty of rumored growth in the tech market,” they said in an email. “However, much if not all is at a standstill while local stay-at-home orders remain in place.”
According to a report from Colliers International, some of the largest lease commencements in the fourth quarter of 2019 were tied to technology companies not headquartered in the Seattle area. Those included a 200,000 square-foot space for Indeed, a 177,000 square-foot space for Google, and a 121,000 square-foot space for Dropbox.
University of Washington computer science professor Ed Lazowska has closely watched the growth of Seattle’s engineering centers for years.
“It’s going to be a tough few years for everyone, and this includes much of tech. There will be less hiring,” said Lazowska, adding that “we have seen this movie before — in 2000 and in 2008.”
Even with that grim prognosis, Lazowska said that “the factors that make Seattle attractive for engineering centers are factors that persist.”
