IBM files RFP, seeks new Austin home

"However, it does not signal a downsizing of the workforce, said Dexter Henderson, vice president of power systems at IBM and the senior executive in Austin."
From ~800K sq. ft. down to 375K sq. ft. certainly signals a reduction in headcount.

https://www.bizjournals.com/austin/news/2022/09/14/ibm-austin-campus-rfp.html

By: Cody Baird – Staff Writer, Austin Business Journal
Sep 14, 2022

IBM is seeking a new Austin home.

On Sept. 14, the tech titan filed a request for proposal for new office space in Austin. The company seeks to leave its two offices near The Domain and consolidate them into a single, cohesive operations hub, said Joanne Wright, IBM vice president of enterprise operations and services.

“We can see an opportunity to bring our systems team, our software team, our marketing teams — all teams that support IBM in the Austin city limits — together in one single team,” she said. “We just completed that opportunity in New York, and we just recently opened a similar opportunity in London.”

IBM, which ranks No. 9 on ABJ's most recent list of largest employers in the region with a headcount of about 6,000, will need about 375,000 square feet, Wright said.

That’s smaller than IBM’s current local footprint of about 800,000 square feet, according to previous reporting. However, it does not signal a downsizing of the workforce, said Dexter Henderson, vice president of power systems at IBM and the senior executive in Austin. Instead, a move to a smaller space is intended to bring employees closer together to encourage collaboration.

“It’s smaller, but it’s going to be a much more modern and dynamic experience,” Wright said. The space will also be used to attract new talent to the company and “keep IBM at the vanguard of innovation.”

IBM will move quickly through the RFP process and expects to make a decision of where to move in the coming months, Wright said. The company is looking to lease space instead of owning it, and Wright said she believed it would be a new build.

IBM (NYSE: IBM) will strongly consider moving elsewhere in The Domain, Henderson said.

“We’ve had great innovation, collaboration, and [The Domain] has been kind of the center of where we’ve created our pool for talent and our world class team,” Wright added.

Competition for office space in The Domain is tight. According to JLL's Q2 2022 office market insight report, the Northwest Austin submarket — which The Domain is within — has just 9.2% vacancy for class A office space. In total, the submarket has 12,033,683 square feet of class A office space, with 680,703 in development.

And far more is on the drawing board for The Domain area, also known as Austin's second downtown.

IBM currently has at least two landlords in that part of North Austin. Stonelake Capital Partners hosts IBM on the south side of The Domain, which was actually built over IBM’s original Austin campus.

Stonelake continues to build out its part of The Domain and may have an inside track on providing IBM with its future home. A Domain office tower recently completed by Stonelake attracted PayPal to the top two floors, and Stonelake has plenty more room to throw up more towers in the neighborhood.

IBM’s other landlord in the Domain area is Philadelphia-based Brandywine Realty Trust. It owns The Broadmoor office campus next to The Domain that IBM has anchored for years — but that campus is getting a reboot. Old buildings will make way for bigger ones soon.

Brandywine’s ambitious 66-acre, $3 billion master-planned and transit-oriented community, which it calls Uptown ATX, promises to expand the boundaries of Austin’s second downtown with about 7 million square feet of office, residential, retail and hospitality spaces — plus a new MetroRail station.

IBM first came to Austin 55 years ago, and today its Austin operations serve as a microcosm of the company as a whole, Henderson said.

"Imagine all the aspects of IBM coming together, collaborating," he said. "The innovation that would come from that, we see as an amazing step forward for IBM."

Though everyday consumers may best remember IBM for their lines of personal computers, Henderson said that today artificial intelligence and cloud technologies are the products most often requested by customers.

Executives for Stonelake and Brandywine couldn't immediately be reached for comment.

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I work in IBM Austin, and have for the last 27 years. The OP is completely off base, and so are most of the other posters. Many, if not most, of the Austin employees have been working at home the vast majority of the time since before the pandemic, and the pandemic drove that trend to overdrive. Back when I used to go to the office for half a day after I moved to consulting in 2016 (I was always in the office before that), my floor was well over half empty, and that was the rule, not the exception.
The root cause is there is far less R+D in Austin than there was, say, 10 years ago, and a lot more lone wolfs like me who don't work with others in Austin. I was in R+D up until 2016, so I know the previous dynamic - those teams worked together in the office, for obvious reasons. I have no idea what IBM's Austin headcount is these days, but I do know most have been working remotely for quite some time. Plus, the 9xx campus is being redeveloped, so this is a good time to right size to better match the current in-office headcount. This is just good business sense, and I am not an IBM apologist.

The 6000 number comes from a 2015 Austin Business Journal inquiry that IBM replied to. In 2016 IBM declined to disclose USA employee head counts. Given that 7 years has gone by and that Power revenue has declined in almost every year since 2015, the 6000 number is quite out of date, and is most likely closer to 2000-2500

6000 employees in Austin? Ha. The old office was practically empty years before covid. I honestly only think 500-1000 IBM employees work in Austin. And that was before the massive RA in 2019.

Does anyone else think IBM vastly exaggerates headcount?

Nothing new really.

IBM's already sold off large chunks at various times of the 500 complex. To Toshiba and such. Just sold off the entire set of outbuildings and parking lot at the north end of 500 and it's now mixed use in a biulding and the rest now commercial space (furniture mostly).

Over Covid all non open space floors (only two were before) converted to 2xX islands of 5' adjustable desks with no privacy.

They're actively consolidating groups into 500 - as they'd wanted - across dev, marketing, ... into same blocks. Folks coming from Main campus across the boulevard.

WOTS (say from a Richoh copier friend with IBM contract) that Main Campus only had central buildings converted .... because they're going to lease the rest out.

Maybe they'll play it with the Covid easing? I don't know. But after a 6 week summer break I came back and attendance had not changed. In my block of my floor - maybe one or two come in many week days - and a couple more (so that is maybe 5 in a block?) once a week.

So Arvind's desire and admonishment isn't playing out. So maybe he'll lease out until "remote" plays out over a few years.

For you Austin folks - will the consolidation suck? I'd hard that the existing facility sucked rocks commute wise. Is the new any better? And also don't think SQFT by cute - it'll go to the current standard of 5' adjustable desks in clusters. Pack 'em in.

'tech titan' ?? Funny and sad...

IBM will lose its best remaining talent during this forced move. Pass the popcorn.

Power is not dead, BUT it is a niche and a shrinking niche at that. If you need performance, Power wins hands down. If you need execution Intel wins hands down. Right now the mix is 80/20 in favor of Intel. Thus the industry joke “Intel is good enough” That’s exactly how customers view it especially with the hyperscalers embracing Intel. it’s good enough

IBM Power10 Shreds Ice Lake Xeons For Transaction Processing

https://www.nextplatform.com/2022/09/07/ibm-power10-shreds-ice-lake-xeons-for-transaction-processing/

Power is dead. It just doesn’t know it yet.

"a move to a smaller space is intended to bring employees closer together to encourage collaboration. “It’s smaller, but it’s going to be a much more modern and dynamic experience,” "

That all sounds completely horrible. Best case is two to a cubicle. Worst case is six people around a table and nobody can get anything done because of the distractions.

If the numbers in this story are correct 800,000 / 6000 = 133 Sq ft per person which is almost what the National average is (175 sq feet). Going down to 375,000 square feet / 6000 = 62.5 square feet per employee. That my friends is an 8x8 cubical with zero conference rooms or educational space. My guess is Austin will down size by approx 1/2 emphasizing LINUX solutions. Given IBM’s statement of partnerships, who do you think will take legacy Power?

They need to move out of Texas completely. What sane woman would want to work in Texas? What sane husband of a woman would want her to work in Texas?

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IBM files RFP, seeks new Austin home

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