San Jose-based PayPal is expecting slower growth in the foreseeable future, and one of the casualties of that projection is the company’s offices in San Francisco occupied by subsidiary Xoom. According to ABC7 News, the payments company will be letting go of its 80,000 square-foot lease at 425 Market Street in San Francisco, where Xoom was based, effective June 3. This decision follows the previously-announced 101,000 square feet at 123 Townsend St., which the company put up for sublease in late 2020 as a result of the global COVID-19 pandemic.
The company announces its quarterly financial results yesterday, and in a call with investors CEO Dan Schulman stated that PayPal has been adversely affected by the rising inflation, American Banker reported. The cause of that, he said, was the fact that the company’s consumer base skews more toward discretionary spending, which has been reduced over the last year. At the same time, e-commerce sales slowed globally, while in-store shopping increased as people found ways to re-emerge from the global shutdowns and spend more time outside. In addition, PayPal suspended transactions in Russia following that country’s invasion of Ukraine earlier this year, which further took a hit to the company’s revenue. The company’s guidance on revenue growth for the year is in the range of 11 percent to 13 percent, a reduction from the earlier guidance of 15 percent to 17 percent.
According to industry reports, PayPal signed the lease with landlord MetLife at 425 Market Street in the fourth quarter of 2013 for a period of 10 years. It is uncertain how many of the employees from this location may lose their jobs, however, the company indicated through a statement that flexible work options will likely be provided to them.
The company’s statement to ABC7 News read: At PayPal, we are continually looking at and evolving how we can work in the most collaborative and efficient ways possible, and we routinely evaluate our global office footprint and spaces to ensure that our company and our employees are best set up for success. The pandemic, in particular, has taught us there are many ways in which we can work effectively while providing our employees with flexibility. PayPal remains fully committed to the Bay Area and to California and we will continue to hire into and invest in our business and people working within the state.
This available space at 425 Market Street will certainly deal another blow to San Franciso’s office vacancy, which has been experiencing its own version of long COVID. According to a recent industry market report by brokerage house Newmark, a year ago, in the first quarter of 2021, vacancy in San Francisco was at 15.3 percent. It should be noted that this is not the same as the availability rate, which tracks closer to 30 percent, according to a number of alternative industry reports. In the fourth quarter of 2021, Newmark measured vacancy increasing to 16 percent, and then 17.2 percent in the first quarter of 2022.