As employers across the region grapple with the reality of a tougher economic environment and more permanence of a flexible workplace solution, they are reconsidering the utility of office space and how much they may need in the future. In another example of technology firms looking to reduce their office footprint across the region, San Francisco-based Okta, an identity management firm, is putting roughly 60,000 square feet it occupies in downtown San Jose on the sublease market, according to industry sources. The space is in DivcoWest’s River Park Towers, located at 333 West San Carlos Street and 300 Park Avenue. Okta’s space is spread across three floors in the 300 Park Avenue tower and it includes floors 4, 5 and 15, each just under 20,000 square feet.
The sublease is marketed by Colliers in San Jose, and the two brokers associated with this sublease are Paul McManus, executive vice president, and Kyle Portal, senior vice president. Colliers declined to comment when asked about this opportunity.
The property is marketed for $1.95 per square foot per month, according to industry sources.
The River Park Towers is owned by a partnership between DivcoWest and Rockpoint Group. The pair paid just over $285 million, or roughly $473 per square foot, for the property in late 2017. The seller at the time was Foster City-based SteelWave.
DivcoWest did not respond to a request for comment before the publishing of this article.
Okta expanded into this space in 2018, and at the time it referred to the location as its Headquarters South. Today, the offering features Class A tech space in an open office format, which also features some private offices and conference rooms. The property has brand new interiors and it is available today until the expiration of Okta’s lease in August 31 of 2024. This 16-story tower is the newer one of the two, and it was developed in 2009, and it’s just over 300,000 square feet.
The sublease is for a minimum of one floor and up to three floors.
This sublease follows news of several other recent sublease announcements across the region. The Registry reported today that Airbnb was placing roughly 450,000 square feet on the sublease market in San Francisco and Santa Clara. Earlier this year, the company’s CEO Brian Chesky announced that its employees will have the flexibility to work from anywhere, including up to three months overseas. The company also abolished location-based pay within the U.S. and saw the recruiting page receive over one million applications following the announcement.
“I think that the office as we know it is over. It’s kind of like an anachronistic form. It’s from a pre-digital age. If the office didn’t exist, I like to ask, would we invent it? And if we invented it, what would it be invented for,” he asked during an interview with Time Magazine in May of this year.
Prior to those two properties hitting the sublease market, San Francisco-based Lyft announced its plans to reduce its office leases in four cities by about 45 percent of the total 615,000 square feet it leases. The reduction in office space will be made in its hometown San Francisco and also in New York, Seattle and Nashville. The Registry also reported that Netlifx was placing 164,000 square feet across two buildings on the sublease market in Los Gatos. In February, Slack put 208,460 square feet of space on the sublease market in San Francisco. Zynga placed 185,000 square feet in San Francisco on the sublease market about a year ago and Airbnb added 300,000 square feet to the sublease tally in July of 2021. In July of 2022, Twitter announced that it would not occupy the 66,000 square foot lease in Oakland it signed with TMG Partners and KKR at 1330 Broadway while trimming its offices in San Francisco and also around the globe in Europe and Asia. Even the fabled venture capital firm Andreessen Horowitz announced that it was moving its headquarters to the cloud.
“It turns out that running a technology company remotely works pretty darned well,” Horowitz stated in his blog post speaking about his firm’s decision and the general trends of distributed work.