A wave of completed and pending tech office leases totaling hundreds of thousands of square feet is boosting San Francisco’s office market after a quiet third quarter.
The deals are evidence that growth is continuing despite cooling in the region’s job market and political uncertainty. In some cases, space is being filled by expanding companies replacing ones that are downsizing.
The personal finance firm NerdWallet has subleased 150,000 square feet from Twitter Inc. (NYSE: TWTR), after the struggling social media company vacated the space at 1355 Market St. starting in August.
“We’re excited to say that we will soon call this iconic S.F. building home. It’s a perfect fit for our growing team of Nerds, and we’re really looking forward to the move up Market,” said Carlton Robinson, head of finance and IT at NerdWallet, in a statement. The company is now located at 901 Market St.
NerdWallet had also previously considered leasing at 181 Fremont, the under-construction office tower in the Transbay district.
A source familiar with 1355 Market St. said that the startup Thumbtack, which connects customers with services, has also leased about 78,000 square feet at the property. Thumbtack, which now occupies 360 9th St., didn’t immediately respond to a request for comment.
The fast-growing messaging startup Slack is also in talks to lease up to 300,000 square feet at 500 Howard St. in space that is currently occupied by the children’s apparel retailer Gymboree Corp. (NASDAQ: GYMB), according to two sources.
Gymboree may relocate to 71 Stevenson St. in space being vacated by Shiseido Co.’s Bare Escentuals, which is moving to New York, said a source. Slack and Gymboree didn’t immediately respond to requests for comment.
The Information earlier reported Slack and Nerdwallet’s leasing activity. Self-driving car companies Cruise Automation, a unit of General Motors Inc. (NYS: GM) and Uber Technology Inc.’s Otto are also seeking 100,000 square feet or more, the Information said.
Other tech tenants looking for more space in San Francisco includ e Airbnb Inc. and Cisco Systems (NASDAQ: CSCO), said sources.
Large companies have also completed deals in new projects, which typically command higher rents, in a sign of strength for developers.
Last month, Adobe Systems Inc. (NASDAQ: ADBE) signed a lease for 207,000 square feet at Kilroy Realty Corp. (NYSE: KRC)’s 100 Hooper St. The developer held a groundbreaking for the project last month.
Adobe is paying gross rent in the $80s per square foot, according to a source with knowledge of the deal, higher than San Francisco’s average Class A asking rent of around $70 per square foot.
Last quarter, Amazon.com Inc. (NASDAQ: AMZN)’s Twitch unit leased 185,000 square feet at Lincoln Property Co. and Gemdale’s 350 Bush St. The deal was the only six-figure lease in the third quarter, but the fourth quarter is on pace to be much more active.
Overall office vacancy rate in San Francisco was 7.7 percent in the third quarter, a 0.4 percent increase over the second quarter. Approximately 3 million square feet of new office space will be delivered in 2017, and the three biggest buildings – Salesforce Tower, 181 Fremont and 350 Bush – that will open next year are now 46 percent pre-leased, according to Cushman & Wakefield.