Office Occupiers Play Musical Chairs in San Francisco

As occupiers adjust their office footprints in the San Francisco area—with many downsizing and a few expanding—subleasing activity increasingly is providing an outlet to facilitate these adjustments.

Data storage player Pure Storage recently announced it will expand into a new headquarters location by subleasing 333K SF office space in Santa Clara Square, a mixed-use tech, housing and retail complex in the northern California city of the same name.

After relocating from its current 250K SF office footprint in Mountain View, CA, Pure Storage plans to put the Mountain View space up for sublease. The move is scheduled for next year, according to a report in The Mercury News.

Pure Storage will sublease two buildings on Augustine Drive in Santa Clara from Analog Devices. JLL represented Pure Storage, which sells flash-based data storage hardware and software solutions for data centers, including artificial intelligence software to help companies save storage space.

According to a recent report in the Silicon Valley Business Journal, Analog listed the spaces for sublease in April following staff reductions and a decision to consolidate its office footprint in San Jose.

Several other Bay Area companies have announced office footprint downsizings recently.

The ancestry-tracking company 23andMe is relocating its corporate headquarters from a 155K SF space in Sunnyvale, to a 65K SF office in South San Francisco with a shorter duration lease.

The San Francisco office market ended Q1 2022 with a vacancy rate of 23.8%, net absorption of negative 1.1M SF and an average rental rate of $76.27 per square foot full service gross on a monthly basis, according to CBRE Q1 Office Snapshot for the market.

The top three leases signed in the market during the quarter involved decreasing or flat office footprints, CBRE said.

Sephora signed a new 287K SF lease for Class A office space on Mission St. that represented a downsizing of its office footprint; Goodby Silverstein and Partners renewed an 81K SF lease without making any adjustment; and CBS Viacom signed a new lease for 71K SF of Class A office space on Folsom St. in a shrinking of its office footprint.

Two projects under construction involve the biggest infusion of new office space in San Francisco, Mission Rock, an office tower encompassing 550K SF that is part of the joint development undertaken by the San Francisco Giants and Tishman Speyer; and Pier 70, a property under development by Brookfield which includes 450K SF of office space.

According to CBRE, 300K SF of the Mission Rock building is preleased.