By Meghan Hall
New comparables reports released by commercial real estate firms Newmark Knight Frank and Cushman & Wakefield show a number of new leases for Class A, Class B and Class C commercial properties starting in the first and second quarters of 2018 in the City of San Francisco. The data covers small-to-medium sized leases; most contract agreements are expected to last between 14 and 120 months and are between 3,725 square feet and 62,500 square feet.
Canopy, a firm that manages several coworking spaces across San Francisco, signed a new 120-month lease at 353-359 Kearney Street. The 3,725 square-foot lease, which was signed in March 2018, begins in June 2018. While the space rented is the smallest, it is also the longest reported by either Newmark Knight Frank or Cushman & Wakefield. Canopy will pay $59 per square-foot.
Pellepharm has one of the more expensive rents for its location at 101 Mission Street; the base rent is $72 per square foot. The biotechnology company, which specializes in dermatological diseases, is renting 4,484 square feet for 60 months and will take up only part of the building’s 20th floor. The new lease will begin May 2018 and end in April 2023.
Peacock Construction is renewing its lease at 200 Pine Street for 36 months is June of 2018. The Bay Area-based construction company will continue to lease the entire fourth floor for $48 per square foot and will receive three months of free rent. The renewal begins in June 2018 and will end in May of 2021.
Shopify, known for its ecommerce platform that allows users to sell unwanted belongings online, is renting Class A office space in San Francisco’s financial district. The sublease includes 8,050 square feet at 33 New Montgomery Street and is one of the shortest contracts, as it will last from March 2018 until November 2019. The lessor, Barings Real Estate Advisors, is charging $67 per square foot and is giving Shopify a month and a half of free rent.
San Francisco-based Zipongo will be leasing the entire ground floor of 560-564 Pacific Avenue beginning in June 2018. The new lease, in which the digital nutrition company will rent 11,000 square feet for $74.50 per square foot, is 29 months long and will end in October 2020.
Hellman & Friedman Family Office, a private equity firm, is leasing its office space at a much higher rate than any other tenant listed in the reports. The company, which also has offices in New York and London, is leasing its 13,737 square-foot space at the Bank of America Center located at 555 California Street. The new lease will take up part of the 49th floor of the building, which runs for $111 per square foot. The 96-month lease is one of the longest reported aside from Canopy’s and will start in June 2018 and end in July 2026.
Scoot.Co is leasing roughly the same amount of space as Hellman & Friedman Family Office but for a fraction of the cost. The San Francisco-based scooter rental company is leasing its 13,832 square feet of Class C office space from First California Investments for just $36.60 per square foot. The office is located at 1245 Howard Street in San Francisco’s West SOMA neighborhood, and Scoot.Co will receive three months of free rent. The 60-month lease began in April 2018 and will end in March 2023.
KeepTruckin’s lease is also new, but the fleet-managing software company is subleasing its space from hospitality giant AirBnB. KeepTruckin will lease 23,466 square feet at 370 Townsend Street. KeepTruckin will lease the space from AirBnB from March 2018 to November 2018; after November, KeepTruckin will lease the space directly from the property manager until November 2023. While KeepTruckin is subleasing the space, it will pay $68 per square foot. That rent will increase to $71 per square foot after November, but KeepTruckin will receive one month’s rent for free.
The San Francisco Department of Public Health is one of the few entities, which is simply extending its current lease by an additional 35 months; the Department of Public Health will continue to lease Fox Plaza at 1390 Market Street and will pay $67.51 per square foot for the 27,413 square-foot space. The extended lease, which was signed in March of 2018, will begin in December 2018 and end in November 2021.
Webinar software company ON24 began leasing 28,354 square feet at 50 Beale Street from Paramount Group, Inc. in April 2018. Like Shopify, ON24 is also located in San Francisco’s financial district, although it is paying a higher rate than Shopify at $72 per square foot. However, ON24 also received four months of free rent, which is more compensation than any other tenant received.
Intercom, a communications company that was leasing 30,445 square feet spread throughout several floors at 55 Second Street, signed a short-term renewal in March 1, 2018, which was effective the same day. Intercom will pay $72.15 per square foot during the 14-month extension. The lease is expected to end April 30, 2019. The company’s San Francisco office is located a short walk from where Shopify is leasing its office, and the ecommerce company uses Intercom’s suite of messaging products.
Strava, a social network designed for athletes, also has a new lease beginning this summer. Located at 208 Utah Street, the 34,000 square foot lease will cover the first and second floors of the building and begin in July 2018. The 84-month lease, in which Strava will be paying $67.94 per square foot, will end in June 2025. Currently, Strava’s headquarters are located at 500 3rd Street in San Francisco.
Hall Capital Partners LLC is renting 43,692 square feet of Class A office space from Morgan Stanley Prime Property Fund, and is one of the largest leases reported by Newmark Knight Frank. The investment services firm, which is renewing its lease and whose office is located at
1 Maritime Plaza in San Francisco’s Financial District, is relocating from the fifth to the 13th floor. Hall Capital Partners LLC is paying $75 per square foot for its new space, which is more than either Shopify or ON24 are paying for their office spaces. Hall Capital Partners LLC began leasing its office in February 2018, and the 96-month lease will end in January 2026.
Pattern Energy Group has the largest lease reported and will begin leasing 62,500 square feet in October 2018. The lease is for a turnkey property located at 1088-1090 Sansome Street and includes all floors of the building. Pattern Energy Group will pay $67 per square feet and the rent is subject to three percent escalations over the course of the renewable power company’s 84-month contract. The lease will end in September 2025.
All of the tenants reported are subject to 3 percent annual rent adjustments except for Hellman & Friedman Family Office and Hall Capital Partners LLC. The former is only subject to annual rental adjustments of 2.5 percent, while no rental adjustments were reported by Newmark Knight Frank for Hall Capital Partners LLC.