TikTok Parent Taking 658K SF Office Sublease in San Jose

Silicon Valley office owners concerned that the market might join San Francisco in a large-scale downsizing of tech office footprints breathed a huge sigh of relief this week as the Chinese parent of TikTok signaled its intention to ink a 658K sublease at a two-building campus that Verizon anchored in San Jose.

ByteDance, the tech conglomerate based in China, is planning to sublease Coleman Highline, a two-building campus on Coleman Ave. in San Jose, according to a report in the San Jose Mercury News.

When the 1.75M SF Gensler-designed development opened in 2020, Verizon Media had pre-leased the lion’s share of the space and Roku had reserved 730K SF for its new corporate headquarters.

In October 2020, Blackstone acquired the campus for $275M. At the end of 2021, in a deal that nearly tripled the value of the property, London-based AGC Equity Partners bought the two-building complex for $780M.

Two large sublease listings in recent weeks were announced in the Silicon Valley market.

Last week, cloud communications player 8×8 disclosed it has put its 178K SF headquarters on the sublease market. The tech company is seeking one or more subtenants for the space it occupies as the single tenant of the five-story building at 675 Creekside Way in the San Jose suburb of Campbell.

The building is owned by NY-based Joss Realty and Australian private equity form Qualitas, which acquired it in March 2020—a year after it opened—for $139M. JLL is marketing the sublease.

In August, Netflix listed a 165K SF office campus in nearby Los Gatos. The streaming company is seeking one or more subtenants for The Sobrato Organization’s two-building office and research complex at 100 and 150 Winchester Circle. The space is available for sublease through Nov. 30, 2027, the balance remaining on the Netflix lease.

According to Cushman & Wakefield, the Silicon Valley market had a 3.7M SF inventory of sublease space at the end of the second quarter, about three quarters of the size of the sublease footprint in SF. The 3.7M in available sublease space represents a 32% increase compared with Q1 2021, C&W reported.

Office availability in Silicon Valley, has been hovering at about 15%. The market saw about 69K SF of positive net absorption in the second quarter, according to a Newmark report.

Office occupancy levels in San Francisco are still languishing below 40%, according to Kastle System’s latest weekly back-to-work barometer, a survey of office entry-card swipes in 10 US cities, with several major tech players announcing reductions in their footprints as they embrace hybrid work.

The list of downsizing tech firms includes one of the city’s largest employers: Salesforce. The tech giant, headquartered in San Francisco—where it occupies two office towers with its name on them—announced in July is listing for subleasing about 412K SF of the 817K SF, 43-story Salesforce West tower on Fremont St., GlobeSt. reported.