Pinterest to Pay $125M to Ditch San Francisco Office Leases

Another tech giant is whittling away at its office footprint in San Francisco: Pinterest will pay $125M to consolidate its office space in the city, vacating space at 505 Brannan Street and 149 Bluxome Street.

The company will retain its headquarters at 651 Brannan Street, according to an SEC filing this week.

“The company currently intends to continue to pay all contractual rent payments but plans to sublease all or a portion of our office space at 505 Brannan Street and negotiate early lease terminations, which could materially affect the company’s cash flows,” Pinterest said, in the filing.

The social media giant said it expects to pay out about $115M associated with the consolidation plan by the end of this month.

Pinterest inked a lease for 148K SF in 2015 at 505 Brannon, in a deal that originally was set to expire in 2033.

“The actual amount and timing of any resulting impact to cash flows will depend on the outcome of any negotiations with landlords and potential subtenants,” Pinterest said, in its statement.

Like many tech companies, Pinterest has adopted a hybrid work strategy that allows its workers to choose between remote work, in-office work or hybrid work utilizing a co-working space. More recently, the company announced it would lay off 4% of its workforce.

More sublease space is the last thing the office market in San Francisco needs. A bevy of high-profile tech companies have been slashing office footprints in the city for the past year, including a company that has its name in lights on two skyscrapers.

Salesforce, one of the largest employers in San Francisco, where it is headquartered and occupies two office towers, announced in July it was listing for subleasing about 412K SF of the 817K SF, 43-story Salesforce West tower on Fremont St.

Salesforce is maintaining ownership of the building and may reoccupy the space in the future. All of the space was vacated as of December.

“We are subleasing floors in Salesforce West to make the most efficient use of our real estate footprint. As the largest private employer in San Francisco, we are deeply committed to the city and are actively welcoming employees back to Salesforce Tower,” the company’s announcement said.

Despite the pledge to bring employees back to its HQ, Salesforce made it clear last summer that the company is fulling embracing its “Success from Anywhere, Careers Everywhere” strategy, giving employees a say in how much work they do in the office and making hybrid/remote work a permanent part of the corporate culture.

Instead of focusing on where people work, the company said it is looking closely at how they work and how they can “empower great (work) experiences for everyone whether they are in the office or in remote locations.”

Salesforce has created what it is calling Flex Team Agreements, which permits work teams at the company to create their own core agreements on how they want to work. In May, the company said its workers in its San Francisco office are coming in to work one or two days a week.

Salesforce also is creating a “Digital HQ” that it says eventually will become more important than the physical HQ. The company said it is facilitating the digital HQ through Slack, a platform that focuses on automation and external communication that was acquired by Salesforce last year.