Retail giant Walmart is closing three U.S. technology hubs, joining a throng of e-commerce and social media firms that are downsizing their office footprints.
While the space that Walmart is exiting in Austin, Texas; Carlsbad, California; and Portland, Oregon, is relatively small, it's not an encouraging sign for the office market. The trio of tech hubs opened with much fanfare in 2018, and were welcomed by local officials as Walmart looked to bolster its efforts to compete against online juggernaut Amazon, which is based in Seattle.
Walmart's global chief technology officer, Suresh Kumar, sent a memo to employees last week advising them of the closings, according to The Wall Street Journal, which first reported the news. The retailer is asking affected tech employees to relocate to other offices to keep their jobs, as well as telling most tech staff it will have to come into the workplace at least two days a week, the Journal said.
Bentonville, Arkansas-based Walmart emailed a statement to CoStar News on Tuesday.
"The unique culture and values of Walmart are at the core of who we are — to our customers, members, associates and partners," the company said. "With this in mind, we’ve made the decision to focus our tech team’s presence within select locations. We hope to relocate or allow for remote work for all affected associates. Our decision to be together more frequently anchors to Walmart’s fundamental belief that our people make the difference, our culture matters and we build stronger partnerships when we are physically together. With this in mind, we've asked the Global Tech team to plan regular in-office days."
Traditional brick-and-mortar retailers such as Walmart, discounter Target and many others scrambled to bolster their omnichannel capabilities in the face of rival Amazon as consumers increasingly shopped online. Just last March, Walmart said it would be debuting tech hubs in Atlanta and Toronto. The retailer's tech arm, Walmart Global Tech, deals with artificial intelligence, data science, software engineering, data engineering and product management.
Now a bevy of tech firms — Amazon, Google, Meta and others — are either downsizing their office space, laying off employees or both. Walmart has joined those ranks, though it still has 14 tech offices open around the world, according to its website
Walmart declined to provide the addresses of the three tech hubs it's closing, disclose how much space those occupy, or how long their leases extended.
But its tech office in Carlsbad was at the Make building at 5600 Avenida Encinas, a 176,100-square foot office complex that's a favorite of tech firms. Walmart relocated from a 9,000-square-foot office and expanded its tech presence in that city to 30,000 square feet 2018. It was a much-publicized move that was hailed by local officials as Walmart looked to attract young tech talent.
"With major trends in retail, such as the decline of brick-and-mortar stores, and the massive increase in online retail shopping, Walmart Labs is ensuring that Walmart bridges the digital and physical experience," a blog post from the city of Carlsbad said. "Walmart Labs in Carlsbad is driving many of the improvements on Walmart’s website that are making the online retail experience seamless for customers."
Brett Ward, the Cushman & Wakefield broker who handles leasing for Make, according to CoStar data, didn't immediately respond to an email seeking comment. That property is owned by Alexandria Real Estate Equities of Pasadena, California, CoStar data shows.
Walmart is now leasing just square feet 10,173 square feet at Make, according to CoStar.
In Austin, Walmart had leased space at 409 Colorado St. The firm that redesigned the space and converted it to office use, Forge Craft Architecture, touted its work for Walmart on its website.
"The concrete frame, brick infill building standing at 409 Colorado St. in Austin was built nearly a century ago in 1920," the firm said. "In 1997, the building became the birthplace of the Alamo Drafthouse, a legendary cultural watering hole for film buffs during its 10-year run there. In 2017, our highest goals in converting the space from the 'dark ages' — a dingy nightclub — to creative office were to bring in natural light and to celebrate the building’s history. The renovation process was a balancing act between intensive renovation and surgical addition."
But the 14,600-square-foot property was sold in 2020 and about a year ago was demolished to make way for an office and residential tower, called 415 Colorado, by developer Stonelake Capital Partners. Since Walmart declined to comment, it's not known if Walmart took an interim space after leaving Colorado Street or if it had those employees working from home.
Stonelake Capital declined to comment.
In Portland, Walmart had occupied WeWork space on the 12th floor of the Power + Light Building downtown at 920 SW Sixth Ave. The flexible office provider in 2018 leased 71,190 square feet at the tower opened in 1928 as Oregon’s Public Service Building and home of Portland’s main power station.
WeWork didn't respond to an email seeking comment.
Walmart established a presence in Portland in 2012 with the purchase of Small Society, a small Portland, Oregon-based mobile app developer that was founded in 2009 by tech entrepreneurs Raven Zachary and James Keller, according to a statement from Walmart in January 2012. Small Society had developed iPhone and iPad apps for Starbucks, the Democratic National Committee and other large enterprises, according to social media posts by Zachery and Keller and published reports.
CoStar News reporters Lou Hirsh, Randyl Drummer and Parimal Rohit contributed.