Another Tech Player Subleases San Francisco HQ Space

The company that inked San Francisco’s largest office lease of 2021 has become the latest tech firm to opt out of its headquarters space as available sublease space in city has topped 10M SF.

Fintech firm Chime is offering the top two floors of its six-floor, 194K SF of space at 101 California Street for subleasing, according to a CoStar listing. The company never occupied the two floors, which encompass about 36K SF.

With tech companies the earliest adopters of remote work, San Francisco has suffered the most severe office occupancy malaise of any large market in the US as some of the highest-profile tech players headquartered in the City on the Bay have downsized their office footprints.

In July, Salesforce, which occupies two office towers with its name on them in the city, announced it is listing for subleasing about 412K SF of the 817K SF, 43-story Salesforce West tower on Fremont St. Months earlier, Yelp abandoned its headquarters at 140 Montgomery St., opting to let its 4.400 employees to work remotely from anywhere in the US.

Meta and Airbnb also have downsized their San Francisco offices, with the latter listing 150K SF for sublease in October.

According to Kastle’s latest office occupancy survey, based on entry-card swipes, San Francisco’s occupancy level is still stuck at about 42%, while the vacancy rate has jumped to 24% from the pre-pandemic level of 5%.

On Saturday, the NY Times published a front-page feature about San Francisco’s beleaguered downtown under the headline “What Comes Next for the Most Empty Downtown in America.”

Ted Egan, San Francisco’s chief economist, told the newspaper they city is facing a looming budget crisis due to the loss of tax revenues from vacant offices. Tracy Loh, an urban real estate specialist at the Brookings Institute, described situation in San Francisco in starker terms:

“Imagine a forest where an entire species suddenly disappears. It disrupts the whole ecosystem and produces a lot of chaos. The same thing is happening downtown,” Loh told the Times.

Making matters worse for beleaguered retail outlets surrounded by half-empty office buildings in San Francisco is that the 42% occupancy rate is a weekly average: according to Low, the level dips to 30% on days like Friday when hybrid workers usually stay home.

The estimated 10.5M SF of sublease availability is only a portion of the historically high amount of available office space in San Francisco, which at the end of the third quarter was estimated by HughesMarino at 23M SF.