San Francisco-based Airbnb, the online vacation rental booking platform that signed a nine-year, 287,000 square-foot lease at Zynga’s headquarters buildings earlier this year, will be paying the gaming company $167.7 million over the term of the lease, or $64.92 per square foot per year, if divided up evenly over the nine years. As part of the deal, Zynga will be providing $55.2 million in tenant improvements, and in connection with executing the lease agreement, Zynga will accrue deferred lease origination costs of $6.5 million.
The information was released by the company in its Form 10Q Quarterly Report earlier this month.
The deal is the largest in the city in 2017 and marks a significant take of sublease space in a property owned by a company which had struggled to sell the building for over a year. Airbnb is planning to start the process of moving into the building in 2018.
Zynga announced the deal initially in its second quarter of 2017 earnings call earlier this year. “We’re excited to announce that we’ve entered into a nine-year lease with Airbnb as an anchor tenant in our San Francisco headquarters,” said Frank Gilbeau. Starting in 2018, Airbnb will take the space in the company’e east tower, while Zynga will continue to optimize its footprint within the building, he said.
In February of 2016, The Registry had announced that Zynga was placing its iconic office building up for sale. The property totals 670,000 square feet, and Zynga was expected to remain inside the property.
Zynga was counting on earning a significant profit on the sale of the property. In 2012, the company paid $228 million, or $340 per square foot, to buy the property from San Francisco-based TMG Partners. When Zynga bought its building at that time, it had occupied 65 percent of the space in the property. In early 2016 when the for-sale announcement was made, the sale of office buildings in San Francisco have for the most part exceeded $800 per square foot, yet a sale never came through.
First quarter of 2016 earnings for the company were expected to be in the range of $150 million to $160 million, a figure that was flat compared to the year earlier. Some thought the financial results that the company was generating were the driving force behind the building sale. But in this week’s quarterly results call, the company announced revenue of $209.2 million, up 15 percent year-over-year. “We delivered operating cash flows of $37.8 million, our best quarterly performance in five years,” said Gilbeau.
As for Airbnb, the company now occupies over 600,000 square feet in San Francisco’s Showplace Square neighborhood, according to a report from the San Francisco Business Times. Its 1,500 employees are spread out across 150,000 square fee at 999 Brannan Street, 170,000 square feet at 888 Brannan Street as well as additional space at 99 Rhode Island Street.