By Meghan Hall
San Francisco’s office market is extraordinarily tight, and the introduction of any new product to market is often welcomed by tenants who have large requirements with a sigh of relief. As Uber continues to solidify its plans for its headquarters adjacent to the newly-completed Warriors’ Chase Center, the ride sharing firm has also decided to place 730,000 square feet of office space up for sublease, according to a marketing brochure circulated by brokerage firm JLL.
The four buildings that Uber has put up for sublease include 685 Market, 555 Market, 1455 Market and 71 Stevenson. 71 Stevenson is the smallest, at just 42,558 square feet. 685 Market and 555 Market are larger, at 135,043 and 235,984 square feet, respectively, while 1455 market is the largest at 323,402 square feet. The four properties are expected to come online during the third and fourth quarters of 2020, with sublease terms lasting from between 20 months for 71 Stevenson, to up to 50 months for 1455 Market.
Uber’s growth within San Francisco has been rapid; in April, its IPO filing revealed the Uber intended to spend $1.9 billion in leases over the next 20 years in the city alone for its Mission Bay headquarters and Pier 70. Uber acquired 100 percent ownership of Mission Bay 1 and 2 buildings from Alexandria Real Estate, for which Alexandria paid Uber $11 million and deferred the remaining $57 million. While Alexandria retained ownership of the land, Uber secured two 75-year land lease deals, which will run about $175 million. For Mission Bay buildings 3 and 4, Uber entered into two 20-year lease agreements that total $1 billion. Uber also entered into a 130,000 square foot lease at Pier 70.
Since July, however, Uber has also cut about two percent of its workforce, more than 1,000 jobs. The began its layoffs in July, when it let go of 400 people; in September and October, Uber cut an additional 435 and 350 jobs, respectively.
Regardless of the amount of new space that comes online, the San Francisco office market is expected to remain tight, even though vacancy increased to 3.8 percent and availability reached 9.1 percent this quarter. Half of the 6.8 million square feet of tenant demand requirements are for blocks of space 100,000 square feet or larger, and only eight blocks—totaling some 1.9 million square feet—are available, according to a third quarter market report released by CBRE. Most supply increases are due to companies such as Uber relocating within the city. CBRE also reports that Dropbox has also placed 106,982 square feet up on the market after it solidified a lease for its new 736,550 square foot headquarters at the Exchange in Mission Bay.