Netflix has put an entire campus in its home city of Los Gatos up for sublease as it tries to shed unused space following a slump in share price, hundreds of layoffs and an unexpected drop in subscribers.
The streaming company, which ended last quarter with nearly 221 million paid subscribers, is seeking one or more subtenants for The Sobrato Organization’s two-building, 165,000-square-foot office and research complex at 100 and 150 Winchester Circle. The property is available for sublease through Nov. 30, 2027, according to its online marketing brochure. That’s the balance of Netflix’s term, said brokers familiar with the company’s lease.
A Netflix spokesperson wrote in an email that the company is terminating lease agreements or putting space up for sublease that isn’t being used. That mirrors the statement it provided Commercial Observer last month after anonymous sources told the publication it was making 180,000 square feet of offices available for sublease in Burbank in Los Angeles County. It’s unclear how much Netflix is asking in monthly rent for the three-story Winchester Circle buildings, which were completed in 2006 and 2008 and are now vacant.
JLL, which is marketing the buildings on the company’s behalf, lists the asking rate as “negotiable” on its website. The brokerage declined to comment, as did Sobrato. Netflix didn’t offer further comment.
The campus became available for sublease this month, according to a person with credible knowledge, just a few weeks after Netflix reported an $80 million write-down in connection with exiting some of its leases. The write-down suggested the company would put more unused offices on the market, making the Winchester Circle campus the latest domino to fall.
Not up for sublease is Netflix’s 485,000-square-foot headquarters half a mile away in Los Gatos. The company relocated its base to the four-building campus at 101 to 131 Albright Way from Winchester Circle from 2015 to 2017. It has no plans to sublease the site, according to a person familiar with the company’s strategy.
Netflix is trying to shed excess space as it deals with subscriber losses and a share price decline of about 60 percent year to date, resulting in two rounds of layoffs totaling about 450 workers. The company delivered a mixed earnings report last quarter, losing nearly 1 million subscribers during that time and missing analysts’ sales targets but beating Wall Street’s earnings estimates.
The quarterly decline in subscribers was half of what Netflix projected, and its report predicted a gain of 1 million by the end of this quarter. Yet that would represent less than one-fourth of the number of subscribers it added in the third quarter last year. Moreover, its revenue projection of about $7.8 billion for the three months ending Sept. 30 is slightly below what analysts had previously forecast.
