Chevron to Sell 92-Acre Bay Area HQ Campus, Reduce Footprint

In another blow to the struggling office market in the Bay Area, global oil giant Chevron has disclosed that it plans to sell its 92-acre headquarters campus in San Ramon, seek smaller office space in the city and move some employees to Houston.

The headquarters complex of the second largest oil company in the US, known as Chevron Park, includes 13 buildings encompassing 1.4M SF and more than 2,000 workers.

Chevron said in a statement it is offering to cover the moving costs of workers who relocate to Houston, where it occupies the former Enron headquarters at an office that currently employs 6,000.

“The current real estate market provides the opportunity to right-size our office space to meet the requirements of our headquarters-based employee population,” Chevron said, in its statement.

Chevron said its headquarters will remain in the Bay Area. “Chevron will remain headquartered in California, where the company has a 140-year history and operations and partnerships throughout the state,” the company said.

Chevron began as the Pacific Coast Oil Co. in 1879 in San Francisco. The company’s HQ was on Market Street until the headquarters was moved to the San Ramon HQ in 2001. The company also has a refinery in Richmond, in an area known as East Bay.

Trent Barnby, JLL senior managing director, told the Wall Street Journal that the Chevron Park campus is unlikely to remain an office property and will be a prime candidate for redevelopment.

“It’s a (once-in-a-generation) redevelopment opportunity and it almost certainly won’t stay in its current form. In today’s world and (after) what’s happened with offices, that’s not going to be the highest and best use,” Brady told WSJ. 

Numerous office occupiers have been reducing their footprints in the Bay Area. The ancestry-tracking company 23andMe recently announced it 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 office occupancy level in San Francisco has been languishing at around 35%, according to Kastle’s Back to Work Barometer, which surveys entry-card swipes in 10 US cities. The only city doing worse in Kastle’s weekly survey is San Jose.