Airbnb Adds 150,000 SQFT of Sublease Space to San Francisco Market as Shift to Flexible Workspace Arrangements Becomes More Permanent

Airbnb, San Francisco, Slack, Zynga, Twitter, Newmark, Oakland, TMG Partners, KKR, Dolby Laboratories, Netflix, Los Gatos, Lyft, Andreessen Horowitz

By Vladimir Bosanac

While some positive leasing news has emerged over the last two quarters in San Francisco, permanent change to workplace strategies has kept the pesky availability rate in the city persistently high. Adding to the city’s commercial real estate woes is news of Airbnb placing the entire 150,000 square foot property located at 999 Brannan Street on the sublease market, according to a report by the San Francisco Business Times. It’s another sign of technology firms finding ways to reduce costs by increasing the one amenity workers want today — the ability to work from home, or in Airbnb’s case from anywhere on the globe.

The company has occupied this property for the last six years, and the sublease from Airbnb would allow a new tenant to stay there under these arrangements until June of 2026. Dolby Laboratories is the owner of the property, and this company occupied the building in the past.

Airbnb will retain its headquarters at 888 Brannan Street, and it will still call San Francisco its home, but it is allowing the work-from-home policy to be a permanent feature of the organization going forward. In April of this year, the company’s CEO Brian Chesky announced that its employees will have the flexibility to work from anywhere, including up to three months overseas. The company also abolished location-based pay within the U.S. and saw the recruiting page receive over one million applications following the announcement.

The news comes at the same time as the company has placed 300,000 square feet of sublease space in Santa Clara at 4301-4401 Great America Pkwy, where it was planning to occupy the Sobroato Organization’s space in two phases from 2021 to 2024. This property is now marketed by Cushman & Wakefield, but Airbnb will retain its long-term lease in the property, according to industry sources.

“I think that the office as we know it is over. It’s kind of like an anachronistic form. It’s from a pre-digital age. If the office didn’t exist, I like to ask, would we invent it? And if we invented it, what would it be invented for,” Chesky asked during an interview with Time Magazine in May of this year.

According to Newmark’s second quarter of 2022 San Francisco Office Market Report, San Francisco’s leasing activity was punctuated by three lease transactions over 100,000 square feet, and leasing has steadily increased so far this year, the report stated. At the same time, however, overall availability and vacancy across San Francisco increased to near-record levels by 240 basis points to 27.7 percent or 24.5 million square feet.

The news of Airbnb’s sublease follows other companies’ decisions to reduce their unused office space. San Francisco-based Lyft is planning to reduce its office leases in four cities by about 45 percent of the total 615,000 square feet it leases. The reduction in office space will be made in its hometown San Francisco and also in New York, Seattle and Nashville. The Registry also reported that Netlifx was placing 164,000 square feet across two buildings on the sublease market in Los Gatos. In February, Slack put 208,460 square feet of space on the sublease market in San Francisco. Zynga placed 185,000 square feet in San Francisco on the sublease market about a year ago and Airbnb added 300,000 square feet to the sublease tally in July of 2021. In July of 2022, Twitter announced that it would not occupy the 66,000 square foot lease in Oakland it signed with TMG Partners and KKR at 1330 Broadway while trimming its offices in San Francisco and also around the globe in Europe and Asia. Even the fabled venture capital firm Andreessen Horowitz announced that it was moving its headquarters to the cloud.

“It turns out that running a technology company remotely works pretty darned well,” Horowitz stated in his blog post speaking about his firm’s decision and the general trends of distributed work.

“When I see headlines about CEOs trying to lure employees back to the office, I feel like it’s probably a doomed approach,” explained Slack CEO and Co-Founder Stewart Butterfield to The Washington Post in December of 2021. “Work is no longer a place you go. It’s something you do.”

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