Gap Subleases Mission Bay Space

SAN FRANCISCO-Last year, Gap Inc. leased a 283,000-sf building in Catellus Development Corp.’s Mission Bay Project. Gap’s Mission Bay space, which will be completed next year, was leased in addition to the 540,000-sf headquarters the company is building at 250 Embarcadero, which will also be completed next year.

However, the Gap’s earnings have been declining over the past two years and the company cannot afford to pay additional rent for space it may not need. So the clothing manufacturer has put the Mission Bay building on the sublease market.

Catellus Development Corp. will not lose in the deal, as the Gap’s 15-year lease says that it will pay the rent regardless of whether it occupies the space or not. Still, this means that the developer has few tenants lined up for the commercial part of the Mission Bay project.

Although the lease rate was not disclosed, the average asking price at the time of the lease signing was $55 per sf. The price has lowered significantly since then, which may present a problem in finding a sublessor to take over the large space.