Tech giant TikTok has formalized its plan to establish a permanent hub in Nashville, Tennessee, signing one of the city's largest office deals over the past decade as the company also contends with the mounting threat of a ban in the United States.
Los Angeles-based TikTok, owned by Chinese tech company ByteDance, signed a more than 143,600-square-foot lease across several floors in the Moore Building along the famed Music Row, a deal markedly larger than the 57,500 square feet it was initially expected to take on in the property at 827 19th Ave. It's also the latest in a string of high-profile deals the company has signed to rapidly expand its portfolio of offices across the country.
The lease with Moore Building landlords Portman Holdings, an Atlanta-based developer, and Nashville's Creed Investment Co. means TikTok will be the anchor tenant for the 15-story, roughly 246,650-square-foot office building that completed construction last year. For the past couple of years, TikTok has operated from a WeWork outpost at the One Nashville tower a roughly 10-minute drive away.
The Nashville deal — which also represents one of the largest U.S. office leases to be signed so far this year — lands alongside increased pressure from federal officials' concerns over TikTok functioning as an instrument for Chinese government spying efforts. President Joe Biden signed a bill Wednesday that aims to force a sale or ban of TikTok tethered to sweeping aid package for Ukraine and Israel.
Under the law, TikTok parent ByteDance has up to a year to sell the business, which has more than 170 million users across the country. Unless the app is sold within that period — more than the original six months proposed in an earlier bill — it would be banned from operating in the United States.
Neither TikTok nor the Moore Building's development team responded to CoStar News' emailed requests for comment. In a publicly released statement issued shortly after the House vote, TikTok said the bill was effectively a ban given the challenges associated with completing a sale, and it is “unfortunate that the House of Representatives is using the cover of an important foreign and humanitarian assistance to once again jam through a ban bill.”
Prioritizing Growth
TikTok and its parent company have been on a leasing streak over the past several years, scooping up high-profile offices in across Silicon Valley, Seattle, Texas, New York and Los Angeles.
Earlier this month it signed on for another 162,557 square feet to significantly expand its existing footprint in the Silicon Valley area where the tech giant already subleases just shy of 660,000 square feet at the Coleman Highline campus in San Jose, California. The deal, another sublease agreement, at 1143 Coleman Ave. is the third-largest office agreement to be signed since the beginning of the year, according to CoStar data.
Along with Nashville and Silicon Valley, the company earlier this year completed a deal to take over an additional roughly 155,000 square feet in Bellevue, Washington, in the Seattle suburb's Lincoln Square North tower, boosting the company's regional footprint to more than 250,000 square feet as it looks to aggressively hire and build out its Pacific Northwest workforce. The deal meant TikTok backfilled space fellow tech giant Microsoft had dumped on the sublease market as part of the Redmond, Washington-based company's aggressive downsizing effort.
TikTok's real estate expansion plans are especially notable given the backdrop of other tech companies that have shrunk their own portfolios as they shift investment priorities and look to rein in extraneous expenses. Microsoft, Meta, Alphabet's Google and Amazon have spent the past couple of years dumping large swaths of unused office space around the world, pushing sublease availability to record highs and overwhelming markets such as San Francisco and New York with space that has weighed down rent growth.
Of the roughly 203 million square feet of sublease space available in the United States, about 25% can be attributed to the tech industry and its efforts to trim its previously vast real estate portfolio, according to CoStar and CBRE data. What's more, upward of half that total sublease availability is still sitting empty.
Updated April 24 with President Biden signing a bill into law that aims to force a sale or ban.