CoStar News, Financial Firm’s Massive Dallas-Area Layoffs Comes as Sublease Space Reaches New Heights
Genpact’s OpenWealth To Lay Off Nearly 1,000 Employees in Dallas Area
OpenWealth, the financial services subsidiary of Genpact, plans to lay off 964 employees at this office building in Richardson, Texas, effective March 31. (CoStar)
By Candace Carlisle
January 25, 2023 | 6:16 P.M.
Financial advisory and wealth management firm OpenWealth, a subsidiary of New York City-based Genpact, plans to lay off nearly 1,000 employees in the Dallas area by the end of March after one of its clients decided it no longer needs the firm’s services.
The layoffs span a variety of positions at 3300 E. Renner Road in Richardson, Texas, about 20 miles north of downtown Dallas. The layoffs of 964 employees are expected to become effective on March 31, according to a Worker Adjustment and Retraining Notification letter the company sent to the Texas Workforce Commission. Genpact is one of Richardson’s largest employers with 2,500 employees as of 2021.
A Genpact spokeswoman declined to share the details of its “confidential client engagements” but confirmed there was “a business decision by one of our clients that affects the roles of some of our Richardson team.” According to CoStar data, the company has a lease totaling nearly 185,000 square feet of office space at the address.
“Responding to rapidly changing client needs is a standard part of Genpact’s agile operations model,” said Danielle D’Angelo, marketing and communication leader of the Americas for Genpact, in an email to CoStar News. “We’re committed to handling every transition thoughtfully and smoothly and ensuring everyone is treated fairly and respectfully. Richardson remains a strategic market for us, and we have several clients for whom we manage services in this location.”
D’Angelo did not immediately respond to a question by CoStar News asking about the real estate impacts of the layoffs.
Job cuts in the financial services industry have been ongoing with more expected as rising interest rates and difficulty in borrowing debt weigh on the industry. Some of the recent layoffs to hit North Texas are tied to mortgages as rising interest rates impact lending on homes.
There is more than 11 million square feet of sublease space on the Dallas-Fort Worth market, setting a new high watermark for the nation’s fourth-largest metropolitan area, said Andrew Matheny, Transwestern’s research manager in Dallas-Fort Worth.
“The demand for office space will slow down as the business cycle slows down and hiring slows,” Matheny told CoStar News.
Up until this month, Genpact was contributing to that mountain of sublease space with about 86,000 square feet of office space at 3101 E. President George Bush Turnpike on the sublease market. That lease has expired and is now available for tenants to lease directly from the landlord, Matheny said.
Steve Triolet, research manager for Dallas-based Younger Partners, said he expects the amount of subleased office space in Dallas-Fort Worth to meet a new threshold by mid-2023.
“We are on a trajectory to hit 12 million square feet of sublease office space being on the market by mid-2023 based on how much has been added in the last few months,” Triolet told CoStar News. “Some of that space rolls off into direct space — like in Genpact’s case — but more is coming to the market than is being converted to direct vacant space.”
Recent tech industry layoffs add another wrinkle to the office leasing story, Triolet said, with Salesforce yet to add some of its Dallas space to the sublease market like they have in San Francisco. Earlier this month, Salesforce executives told regulators the layoffs would result in a reduction in office space in “certain markets.”
Triolet told CoStar News he’s closely watching to see how those national layoffs trickle into the Dallas-Fort Worth region. If the job market softens, he said, it could once again impact the demand for office space.
“Since there’s been more clarity on hybrid work, it seems the sublease market is increasing,” he said. “There’s sublease space of every shape and size in Uptown, Far North Dallas, Las Colinas-Irving, Richardson and Plano.”
Some of the office sublease market in Dallas-Fort Worth has begun to get stale, even as it has grown, but new space routinely comes to the market. Ride-hailing company Uber, which listed more than 100,000 square feet of office space on the sublease market in 2020, later scaling down its expansion plans to Dallas and forgoing millions of incentives, has only added to its sublease profile. The available space in the initial phase of The Epic expires this year, rolling for the sublease market, however, Uber has nearly 364,000 square feet of space available for sublease spanning 13 floors of the 23-story office tower, which was completed last year. CBRE is marketing the sublease to would-be tenants on behalf of Uber, according to a marketing brochure.
Reata Pharmaceuticals has been marketing its entire build-to-suit project — a 21-story, 327,000-square-foot office building at 6100 Legacy Drive in Plano — for sublease since last year. CBRE has been marketing the sublease to would-be tenants, which might be a few tenants rather than a single tenant, according to marketing materials. The building, completed in 2021, is still in shell condition.
Meanwhile, another Deep Ellum space is on the sublease market, with fast-growing startup Bestow listing its office space totaling more than 40,000 square feet spanning two floors, fully furnished and designed without the Dallas-based digital life insurance company ever taking occupancy of the space at The Stack Deep Ellum at 2700 Commerce St. in Dallas. Bestow’s office lease — and thus the sublease — runs through the end of January 2034. Dallas-based Altschuler and Co. is marketing the sublease on behalf of Bestow, according to marketing materials.
Triolet said he sees the most traction for subleases being between 3,000 square feet and 10,000 square feet, with office tenants actively taking down subleases in that range on a regular basis. For the bigger spaces, Triolet said it’s likely they will need to chip away at them with smaller deals.