Tech Gobbles Up Space in Preleasing
Mega-office builds are giving way to mega-leases in preleased agreements with tech giants, by and large, resulting in nearly complete absorption in the city as new development is often decades away.
SAN FRANCISCO—It stands to reason that mega-office builds are leading to mega-lease takedowns, especially given that most taking place as preleased agreements. This is resulting in nearly complete absorption in the city. Also no surprise that these leases are being grabbed by tech giants.
One of the largest leases year-to-date from Square Inc. will add 104,135 square feet to its Mid-Market headquarters. The company will now occupy a total of 469,056 square feet at 1455 Market St., a 1-million-square-foot office building owned by Hudson Pacific Properties.
Earlier this year, Facebook took all of the office space, some 743,000 square feet, at the Park Tower at Transbay. This followed a Facebook lease last year at 181 Fremont.
“We typically estimate six people per 1,000 square feet of office space,” Mike McCarthy, executive vice president, Colliers International, tells GlobeSt.com. “Tech is the holy grail when it comes to recruiting and retention of employees.”
LinkedIn and Google are among the firms that have taken space in San Francisco buildings, while those companies’ headquarters are also neighbors to the south in Silicon Valley. Other large lessees in San Francisco are Salesforce, Airbnb, UBER, Dropbox and WeWork.
Salesforce Tower is located at 415 Mission but Salesforce also has space at 350 Mission as well as 50 Fremont. Airbnb’s headquarters is located at 888 Brannan, where the company has 170,000 square feet.
Fortunately, more office space is on the way, undoubtedly ready for preleasing by voracious tech firms. Transbay Parcel F, also known as 542-550 Howard, is a 61-story mixed-use project that will be San Francisco’s fourth tallest building. The project is currently in the environmental review process. The 800-foot high rise will have 251,000 square feet of class-A office space, along with 170 residential units, 210 luxury hotel rooms, 79,000 square feet of shared space and 9,000 square feet of ground-floor retail, according to California Economic Forecast. The project will also have access to the Transbay Transit Center and 10,000 square feet of open space. The project team includes Hines, Goldman Sachs’ affiliate Broad Street and Urban Pacific Development.
The San Francisco Giants, along with joint venture partner, Tishman Speyer, are leading the plan to redevelop A&T Park’s parking lot. The proposed project is made up of 1.4 million square feet of office, retail and restaurant space, and more than 1,300 apartments. The multifamily buildings will vary in size, with the tallest being 240 feet, and 40% of all units will be reserved for low and middle-income households.
The developers have agreed to restore Pier 48 and incorporate improvements to Mission Rock waterfront access. The project will also include an 850,000-square-foot parking structure (3,100 parking spaces) and 8 acres of parks and open space. The project is planned to be developed in four phases, which could take up to a decade to complete. It is expected to be approved in the second half of 2018, with possible groundbreaking in 2019 and completion by 2025.
Earlier this year, Lendlease proposed to build some 234,000 square feet of office space, 610 multifamily units, 21,000 square feet of retail space and an underground parking structure with 224 spaces at 30 Van Ness Ave. The project would maintain the existing five-story structure, ultimately yielding a new 48-story building that is 520 feet high. Its current office tenant, the city of San Francisco, is expected to vacate the building and move to 1500 Mission St. (also under construction). 1500 Mission is expected to be delivered in 2020, so construction at 30 Van Ness will begin in 2020 or later, according to SocketSite.
TMG Partners is planning to redevelop the San Francisco Tennis Club located at 88 Bluxome St. The project would include 833,000 square feet of office space, a 30,500-square-foot community center with a public pool, 24,000 square feet of ground-floor retail and restaurant space, 9,500 square feet of production and repair space, an underground parking structure with 171 spaces and an affordable-housing component that is not yet determined. The site will also retain its tennis club feature with 12 tennis courts boasting 35-foot ceilings and new clubhouse space, which will be located under the basement parking facility. The proposed project is dependent on the adoption of the Central SoMa plan, and no timeline for development has been determined, according to Socketsite.