By Meghan Hall
Companies’ thirst for large blocks of space in San Francisco is unabated heading into the second quarter of 2019, with two big companies inking leases greater than 100,000 square feet in San Francisco roughly a week apart. According to sources familiar with the transactions, Sony PlayStation has taken 130,000 square feet at 303 Second St., owned by Kilroy Realty. Glassdoor, an employer review platform, is expected to finalize its 120,000 square foot lease at 50 Beale today, renting its office from Paramount Group, Inc. The two leases are further indication of large-block tenant demand within San Francisco.
Chris Roeder, Ted Davies and Ann Montilla of JLL represented Kilroy Realty in the PlayStation transaction, while Wes Powell, Tom Doupe, as well as Roeder and Davies, represented Paramount in its negotiations with Glassdoor, according to sources.
The two properties are located just outside of San Francisco’s Central Business District, within walking distance of the Embarcadero BART station. 50 Beale is a 24-story, 660,000 square foot Class A office tower originally constructed in 1968 by the Bechtel Corporation; the building has been renovated several times since its construction, mostly recently in 2012. Kilroy Realty’s 303 Second St. property is slightly larger in size, featuring 782,116 square feet of customizable office and work space. The building was designed by Whilster-Patri and built in 1988.
Despite San Francisco’s supply-constrained office market and rising rents, demand for blocks of space greater than 100,000 square feet remains robust, according to research presented by JLL at the end of the first quarter of 2019. By the end of the first quarter, seven tenants succeeded in securing spaces greater than 100,000 square feet in San Francisco. Asana signed a 270,000 square foot lease at The Swig Company’s 633 Folsom, while Pinterest announced that it would be the anchor tenant at 88 Bluxome after signing a 490,000 square foot lease for the still-unentitled SOMA project. 88 Bluxome is to be developed by Alexandria Real Estate and TMG Partners.
With leasing still gaining momentum, JLL reports, office fundamentals are expected to continue to tighten. Average asking rents continue to climb, up one percent quarter-over-quarter and up 9.6 percent since the same quarter last year. Vacancy continues to decrease and declined to six percent during the first quarter. As demand continues to surge and new deliveries limited, JLL predicts that these trends will only continue into the second half of 2019.
As of this writing, JLL had not yet returned The Registry’s request for comment.