By Meghan Hall
Same-day grocery delivery platform Instacart is expanding its footprint at 50 Beale St. in San Francisco, taking an additional floor nearing 30,000 square feet according to a source familiar with the transaction. Currently, Instacart already leases two floors at the building, owned by Paramount Group, and the lease will bring Instacart’s total occupancy in the building to 90,000 square feet.
JLL represented Paramount Group in the deal, while CBRE worked on behalf of Instacart. The company’s expanded lease is expected to commence within the second half of 2020 and will make Instacart one of the building’s largest tenants.
The lease was signed less than a week after it was announced that Glassdoor had taken 120,000 square feet across four floors of the building, with the intention of relocating its Mill Valley headquarters to Beale Street. 50 Beale is a 24-story, 660,000 square foot Class A office tower that was constructed in 1968 and served as home to the Bechtel Corporation. It was most recently remodeled in 2012 before Paramount Group purchased the property in 2014 for about $400 million.
The office tower is also currently home to Blue Shield of California. However, the company is planning to move its headquarters to 601 City Center in Oakland and will free up more than 350,000 square feet of space in the building. 50 Beale was renamed the Blue Shield of California Building in 2006, after the not-for-profit health care provider signed a lease expansion with Beacon Capital Partners. At over 272,000 square feet, it was the largest commercial lease agreement signed in San Francisco that year. The company has had its headquarters at the property since 1996.
Who will fill Blue Cross’ space in the coming months is unclear, although the San Francisco Business Journal has reported that PlanGrid, a software planning app, is in negotiations to lease 150,000 square feet in the building.
The remaining space will likely be snapped up quickly, as blocks of office space larger than 100,000 square feet within the city of San Francisco are rare. According to Newmark Knight Frank’s first quarter San Francisco Office Report, there were more than 16 tenants looking for at least 100,000 square feet of space in the city and such availabilities only existed in two buildings and two co-working spaces. The report states that only one development, 1 De Haro St., will be completed in the next 18 months and deliver more than the 100,000 square foot requirement major tenants are looking for. Class A vacancy rates in the South Financial District, where 50 Beale is located, remains the lowest across the city at 1.7 percent. The lack of availability will thus only continue, states Newmark Knight Frank’s Research Director, Andrea Arata, leading to an increasingly competitive office market.