Facebook ready to lease 43-story S.F. office tower
Facebook is on the verge of signing a lease at the 43-story Park Tower at 250 Howard St., nearly tripling its San Francisco office space.
The company is expected to take up 750,000 square feet — the entire tower, according to a person familiar with the matter, who was not authorized to speak about the deal publicly. Once signed, it will be the biggest lease of the year in San Francisco, slightly larger than Dropbox’s 736,000-square-foot deal earlier this year at 1800 Owens St. in the Mission Bay development.
Facebook has its headquarters in Menlo Park, where most of its employees work. But in recent years it has expanded to offices in Fremont, Mountain View, Sunnyvale and San Francisco. Last year, the company confirmed it would move some Instagram staffers to 181 Fremont St., where it leased 432,000 square feet, according to CoStar
Group, a firm that tracks real estate data.
Many younger tech employees enjoy living in San Francisco for its nightlife and culture, hopping on company shuttle buses for long slogs on the freeway to work. Some have opted to work for San Francisco companies including Salesforce, Twitter and Uber to cut down on their commutes. So Cisco, Facebook, LinkedIn and others that once stuck to the South Bay have been opening offices in San Francisco to better compete for employees.
“Our whole city is turning into a tech central magnet,” said Jesse Gundersheim, a CoStar market economist.
It is unclear when Facebook will formally sign the Park Tower lease. Chris Roeder, managing director of Jones Lang LaSalle, the building’s leasing agent, said in an email Friday that “no lease has been completed yet.” Facebook spokesman Jamil Walker declined to comment.
The Fremont Street and Howard Street towers, taken together, represent a dramatic shift in Facebook’s real estate strategy. During its first decade in the Bay Area, Facebook tried to house its engineers under one roof. In 2015, in the most literal manifestation of that vision, it moved thousands of employees into a Frank Gehry-designed building in Menlo Park, which it billed as having “the largest open floor plan in the world.”
Meanwhile, Google, LinkedIn, Dropbox, Uber, Lyft and Salesforce gobbled up San Francisco buildings from Mission Bay to Mid-Market to the Financial District. Rents have soared accordingly.
Though a late entrant into the real estate rush, Facebook comes with a sizable wallet. At the end of March, it had nearly $44 billion in cash and equivalents.
With 1.2 million square feet of space in the heart of the city’s Transbay district, Facebook will have enough space to accommodate more than 8,000 people. Salesforce, the city’s largest tech employer, has 7,500 local workers; CEO Marc Benioff has said that the company plans to increase its San Francisco workforce to about 10,000. The two companies’ engineers, designers and marketers will knock elbows on the sidewalks around Salesforce Tower.
As Facebook’s staff continues to grow, the company has sought offices outside Menlo Park, where it already owns or leases 39 percent of the space, CoStar said. (The figures include “flex” space, which can be used for offices or other purposes.)
As traffic increases and housing costs continue to rise, Bay Area tech giants have sought to spread offices around the region. But the movement isn’t just in one direction. San Francisco’s Lyft, for example, opened a center for self-driving car research in Palo Alto last year.
“It’s a reflection of all the companies wanting to have their employees be able to spend less time commuting,” said Adhi Nagraj, San Francisco director for SPUR, a civic planning organization.
And given their needs for space, tech companies no longer favor the low-slung offices in San Francisco’s South of Market area. As skyscrapers rise in the new Transbay neighborhood, companies are flocking there, Gundersheim said.
On its website, Park Tower emphasizes its views and access to outdoor and open space. The building is a fiveminute walk from Salesforce Tower and seven minutes from LinkedIn’s Second Street tower.
Those amenities and the location don’t come cheap. The average asking rent in the south Financial District is just under $70 per square foot a year, Gundersheim said.
“The companies that are willing to (have offices) there are going to pay some premium rates,” he said.