Spotify is looking to sublease five floors of its offices at Manhattan’s 4 World Trade Center, planning to vacate them by the end of the year.
Spotify plans to vacate five floors of its 4 World Trade Center offices by year-end and will seek to sublease them. The streaming giant is among the largest tenants in the building, where it has 564,000 square feet — 14 floors — of offices.
The space it’s looking to unload includes more than 85,666 square feet, which the company took over from the Port Authority of New York and New Jersey in 2018 when Spotify expanded its footprint.
“Our focus has shifted more towards optimizing our current portfolio and reviewing our real estate needs around the world as opposed to significant expansion of our presence in current markets,” said Spotify CEO Daniel Ek in a recent earnings call, explaining that the company would pare down its real estate costs as more employees opt to work remotely.
With Spotify’s plans, Manhattan’s office market has been dealt another significant blow since the pandemic, as vacancies reached a record high this year. Major tech firms that drove demand for offices, such as Meta and Twitter, have cut staff and reduced their need for real estate.
But Spotify will still need to find takers to sublet, as their long-term arrangements made when the streaming company moved in have saddled them with the space until at least 2034. The contract the company inked in 2017 featured extensive customizations on each of its 14 floors, working out to $33.29 million annually on rent alone, or $2.77 million per month.
As streaming remains the dominant form of music consumption, it’s difficult to imagine that Spotify’s cutbacks would indicate any significant struggle. The platform continues to thrive among its peers, with increasing artists hitting the 1 billion Spotify streams landmark — a level of engagement that even Apple Music can’t touch.