Google Will Exit Waterfront Tower in San Francisco

Google has disclosed that it will not be renewing a 300K SF lease for office space that it has occupied since 2018 at One Market Plaza on San Francisco’s waterfront.

One Market Plaza is one of San Francisco’s largest office properties, with two towers and an 11-story annex building known as the Landmark, encompassing a total of 1.6M. The complex is jointly owned by Blackstone and Paramount Group.

When its lease expires in April, Google will be moving out of One Market’s 42-story Spear Tower but will continue to occupy space in the smaller Landmark building as the tech giant consolidates its office footprint in the city, the San Francisco Chronicle reported.

A spokesperson for Google told the newspaper the company is “focused on investing in real estate efficiently to meet the current and future needs of our hybrid workforce,” adding that Google remains “committed to our long-term presence in San Francisco.”

According to the report, Google plans to consolidate much of its operations from One Market to nearby 345 Spear Street, where the search giant leases about 400K SF. Google is expected to renew a lease at the Spear Street building next year.

In January, Paramount and Blackstone secured an extension of a $975M loan for the One Market Complex that was scheduled to mature the following month.

According to the Chronicle, the partners worked out a deal to extend the loan for three years, with an additional one-year option, in exchange for making a $125M payment on the maturing debt.

Although the complex, located at 1 Market Street along the Embarcadero, was transferred to special servicing in advance of the negotiated loan extension, the partners described the transfer as “purely a procedural step needed to effectuate a change to the term of the loan, which required approval from the special servicer.”

Blackstone and Paramount, in a joint statement provided to GlobeSt.com in January, stressed that the One Market complex has been outperforming other office properties in the San Francisco market.

“This property is approximately 96% occupied, has seen the most direct leasing volume of any office building in San Francisco over the past three years and has recently signed leases at rents above pre-COVID levels,” a spokesperson for the two companies said.

“Our continued belief in the strength of this trophy asset is illustrated by our decision to invest additional capital in it,” the spokesperson said. Based on recent leasing activity, One Market Plaza, which offers unobstructed view of the Bay, has been able to secure net effective rent that is 20% higher than other trophy office buildings in San Francisco.”

The overall office vacancy rate in San Francisco hit 36.6% in the first quarter, with total availability increasing to 38.7%, according to data from CBRE.