Seattle P-I reporter Joe Tartakoff reported more details on the plan, including that the company will allow some of its leases to expire and that one facilities planning scenario expects Microsoft employment growth to be flat for the 2 1/2 years.

It's not surprising to see the company reining in its real-estate spending given its already announced plans to cut total operating expenses in the current fiscal year by $400 million to $500 million through slower hiring, reduced capital spending and cuts to travel budgets and vendor services.

Gellos, in his statement, suggested the lease expirations are the result of careful planning as the company's West Campus expansion comes on line.

"I can confirm that as some leases expire, we will not renew them. It was our plan all along to move the people in many of those buildings to the new construction that is nearing completion on campus and in Bellevue, and to our Westlake/Terry facility in Seattle."

Indeed, Microsoft Entertainment and Devices Division President Robbie Bach said in an interview earlier this month that he was looking forward to completion of the West Campus expansion to bring his division together in one place.

"We'll be moving in there over the course of the spring. All you have to do is drive by and realize that some of the buildings are further along than others. That's sort of the nature of the way these things work, so we'll start moving in over the spring.

"I think it's exciting and it's important. Certainly, we can live and work in a world in which we're spread out, but proximity does make things easier. And the ability to get people together, having most of the team on one site will matter and will help us."

For background on the campus expansion and Microsoft's Puget Sound area real-estate footprint, see:

Microsoft campus expands, transforms, inside and out, November 2007

Microsoft in Bellevue, April 2007
Microsoft expands real estate in Seattle, September 2007
Microsoft's "Touchdown Space" in South Lake Union, April 2008