With San Francisco’s office market struggling to regain footing after the pandemic, tech giant Google is leaving a premier office tower next year.
The company said that while it is adjusting to meet current objectives and patterns of work, it will stay in the 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,” Ryan Lamont, Google spokesperson, told The Epoch Times by email May 13. “We remain committed to our long-term presence in San Francisco.”
Currently occupying about 300,000 square feet in One Market Plaza—a “trophy” class building on the Embarcadero in the city’s financial district—the company is reportedly downsizing its office footprint once its lease expires in April 2025 due to changes in the workplace and an increase in hybrid work opportunities.
The firm will continue to occupy one of the two towers in the complex, according to Mr. Lamont, and employees vacating the other tower will continue to work at Google’s other offices around San Francisco.
Composed of two high-rise towers atop a six-story office building with 1.6 million square feet of space, including about 60,000 square feet of retail, the One Market Plaza complex is one of the most valuable properties in the city with a defining mark in the skyline and boasting “unobstructed bridge-to-bridge bay and city” views, according to the website of the building’s owner-operator, Paramount Group.
Situated near the San Francisco Ferry Building and numerous restaurants and retail establishments, the property is considered one of the most desirable locations in the city, according to real estate experts.
Software engineering firm Autodesk downsized its footprint last year, and Visa also announced it was leaving the premises in 2023, but a number of high-profile firms remain—including Citibank, Morgan Lewis, and Capital Group, among others—and the owners said they are in discussions with prospective tenants to fill the soon-to-be empty space following Google’s departure.
“This trophy asset continues to generate leasing demand at record rent levels,” a spokesperson for Paramount Group and Blackstone told The Epoch Times by email May 13. “This space is leased through April 2025, and we are already in active dialogue with potential new tenants.”
The news that Google is abandoning offices portends further downside, as more leases signed before the change in work trends which accelerated during the pandemic expire, according to real estate analysts.
“Leasing activity in San Francisco is increasing, but there are a few more of these large pre-pandemic era leases that have yet to roll over and downsize,” Nigel Hughes, senior director for market analytics for the San Francisco Bay Area for real estate data firm CoStar, said in a LinkedIn post on May 8. “That’ll likely keep the vacancy rate rising for a while longer.”
Office vacancy rates, debt loads, and high interest rates are impacting downtowns across the country, according to brokers. With property valuations plummeting, and some buildings selling for a fraction of their prior purchase price, uncertainty prevails nationwide.
Some experts have voiced concern that smaller, regional banks with exposure to commercial mortgage-backed securities could face significant pressure in the coming months unless debt can be reworked soon.
