Google Latest Tech Tenant to Exit Prominent San Francisco Office Building

Google Latest Tech Tenant to Exit Prominent San Francisco Office Building

Tech titan Google is giving up half the space it leases in one of San Francisco's largest office complexes in the latest blow to a market struggling to recover from the COVID-19 pandemic.

The Mountain View-based company said it will exit One Market Plaza's Spear Tower later this year after opting to not renew its 263,000-square-foot lease in the building.

A joint venture between New York firms Blackstone and Paramount Group owns Spear Tower. The owners said they are working to find a replacement for Google.

“This trophy asset continues to generate leasing demand at record rent levels,” a spokesperson for the Blackstone-Paramount venture said in an email. “This space is leased through April 2025, and we are already in active dialogue with potential new tenants.”

Google will be the latest in a string of tech firms leave the 1 million-square-foot building. Last year, software company Autodesk listed 73,000 square feet of its space for sublease, and Visa has listed its entire space in the tower for sublease. The financial technology giant plans to move Mission Rock, a megaproject set to open its first phase this year.

One Market Plaza is made up of three buildings and contains 2 million square feet of space. Google will continue to occupy 300,000 square feet in the development's smallest building, known as The Landmark, according to a company spokesperson.

Google Committed to City

 

“As we’ve said before, we’re focused on investing in real estate efficiently to meet the current and future needs of our hybrid workforce,” the Google spokesperson told CoStar News. “We remain committed to our long-term presence in San Francisco.”

Employees are currently working at Spear Tower will be relocated to other San Francisco offices. In addition to its space in The Landmark building, Google leases 415,000 square feet a quarter mile away at 345 Spear St.

One Market Plaza is in the South Financial District and is one of the San Francisco neighborhoods most affected by the office slump created by the pandemic. The market's vacancy rate stood at 6% in 2019 and has surged 20 percentage points since then, according to CoStar data.

In addition to Visa and Google, Meta, Salesforce and Slack have given up large amounts of space in the past four years. The overall San Francisco market has similar vacancy levels to the South Financial District and outpaces the national vacancy rate of 13%.

As Google focuses on the development of its artificial technology products in the near future, it will continue to make cuts to its real estate portfolio, executives said in an earnings call earlier this year.

The company paid $1.2 billion in the fourth quarter of 2023 alone on costs related to shrinking its global office footprint. Google has listed more than 1.5 million square feet of office space across several offices near its headquarters in Silicon Valley.

At Spear Tower, landing a large lease to backfill Google's space could be tough as they have become a rarity since the pandemic, according to CoStar data. In 2019, tenants signed 12 leases of more than 100,000 square feet in 2019. There has not been a year since then when more than three leases of that size have been signed, according to CoStar.

However, artificial intelligence companies have shown increased interest in expanding in San Francisco in the past year. For example, ChatGPT maker OpenAI subleased over 400,000 square feet from Uber in the city’s Mission Bay district in November.

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