Office Construction Dip May Cause Heartburn

Kilroy Realty recently signed a 12-year office lease with a software firm for 100,850 square feet.

SAN FRANCISCO—San Francisco may face a shortage of available office space between now and 2022 when the next major office project will be completed. Space continues to dwindle, with Facebook’s lease of the last available office building in San Francisco taking all 750,000 square feet at Park Tower. Then a few weeks later, Facebook leased 1 million square feet of office space on the Peninsula and finally leased an additional 750,000 square feet in Fremont. And, Facebook recently sublet 456,760 square feet from WeWork, which in turn had sublet from LinkedIn. That’s a whopping 3 million square feet leased in 30 days.

And, at the end of July, Kilroy Realty Corp. signed a 12-year lease with a publicly traded multinational software company for 100,850 square feet of office space. The prior lease was scheduled to expire in 2019. The office space, located on Brannan Street in South of Market, is a three-story historic brick and timber building. It is blocks away from AT&T Park, the soon-to-be expanded Muni Metro T Third Line, and multiple restaurants and shops.