While office leasing activity across San Francisco may be starting to reanimate in the new cycle, it is obvious that publicly traded firms with strong fiscal responsibility may be reconsidering the amount of space they need. Airbnb is one of those San Francisco-based companies rethinking not only what the new normal will bring to its business but also where it hopes to house those employees in the future. One thing is for certain, it won’t be at 650 Townsend, which the company is actively marketing for sublease.
The property at 650 Townsend offers up to 294,966 rentable square feet across six floors ranging from 56,000 square feet to nearly 62,000 square feet. Airbnb’s lease runs through February of 2027, and the CBRE flyer marketing the asset states that it is “priced to meet the market.”
The building is owned by Beacon Capital Partners, which, according to earlier reporting by The Registry, the company purchased in 2019 for $602,679,598, or just around $900 per square foot. Beacon bought it at that time from Zynga, which used the building as its corporate headquarters. Following that acquisition, Airbnb leased roughly half of the 670,000 square foot property, and now, just about two years following that transaction, it finds itself not needing this property anymore.
It is not clear at this point in time if Airbnb’s needs for office space in the future have permanently changed, although its CEO, Brian Chesky, has publicly stated the company is actively reorienting its business and priorities. This was acutely highlighted in the firm’s first quarter of 2021 earnings report, when the company reported nearly $1.2 billion in losses on $887 million of revenue. Nearly ten percent of that loss, or $113 million, was attributed to a lease no longer deemed necessary, according to the company’s shareholder letter, which did not specifically state which lease was in question. The activities of the firm’s real estate team helped close that knowledge gap when they hired CBRE to offload the lease at 650 Townsend.
The CBRE marketing team is lead by Jenny Haeg, Nate Zoucha and Brooke Agresti.
According to some publicly accessible chat rooms, New York-based Convene, a shared workspace and event space provider was interested in taking at least one of the six floors available in the property. The interest was mainly geared toward the second floor of the building, which offers broad opportunities for event space and shared offices, the primary economic activity of the company.
And it’s these, turnkey spaces that seem to garner most attention across the market, according to some industry experts. In addition, this property also offers two on-site cafeterias, a newly renovated 5-story atrium and an attached 6-level parking structure.
According to a recent, May of 2021 office leasing report by CBRE, vacancy in the San Francisco remained at 20.9 percent while availability increased by 30 basis points to 27.7 percent. While demand for space increased, as well, it is clear that subleases like 650 Townsend are keeping the industry on edge as nearly 10 million square feet of sublease space, nearly half of all available space, remains on the market.
The difficulty in predicting what the future holds was perhaps best summarized in Airbnb’s shareholder letter: “…it remains too early to predict if the recovery will continue at the same pace in the second half of 2021…With the increased availability of vaccines and the easing of some travel restrictions, there has been greater willingness by guests to search for and book travel later in the year. Offsetting this is the difficulty in predicting factors such as future COVID-19 outbreaks or travel restrictions globally.”