Cutting Costs, Microsoft Backs Away From Office Space

Microsoft has discontinued negotiations over leasing a new office building in Seattle due to the deteriorating economic situation, it said.

The company was originally interested in the building not for new employees but to help alleviate crowding on its suburban campus and to help consolidate business groups, said Lou Gellos, a Microsoft spokesman. The building, still under construction, will have 300,000 square feet of office space.

The decision against pursuing the building downtown is in keeping with recent decisions to cut costs at the company. In November, CEO Steve Ballmer said that the company was closely examining all aspects of the business in an effort to reduce costs, including slowing growth in new hiring.

The change of plans also follows recent rumors, which the company has declined to comment on, of impending layoffs.

Microsoft hadn't yet identified which workers would have moved into the building had the lease been completed, Gellos said.

Without the new building, Microsoft has "one less option" for consolidating groups and alleviating congestion, he said.

Microsoft's expansion in Seattle is relatively new. It now has a handful of locations in the city, including one where any employee can use a desk for a day or an afternoon.

The company is continuing to complete several other planned expansions announced several years ago, including new buildings in Bellevue and Redmond, near its corporate campus, Gellos said.