BridgeBio agrees to sublease in Mission Bay
Drug development firm BridgeBio has subleased 52,604 square feet from Dropbox at its Mission Bay headquarters after the tech company reduced its office plans and went remote work first.
It’s the second biotech deal in the office complex at 1800 Owens St. and one of the largest of 2020. Vir Biotechnology, an immunology company that is researching the coronavirus, also subleased 133,896 square feet last year.
Biotech growth in the 750,000squarefoot property, branded as the Exchange, has helped boost its value to lofty heights. Owner Kilroy Realty is in contract to sell the building for $1.08 billion this month, the secondlargest sale of a single property in San Francisco history.
The biotech sector is hungry for lab space and offices, in contrast to tech companies that are giving up their workplaces, in a positive sign for a Bay Area economy in turmoil. Life science is classified as an essential business and many tasks require inperson work, fueling the demand for real estate.
BridgeBio’s lease was signed in October and confirmed by the company this week. Occupancy began in February. The company will have space for 358 employees. BridgeBio has around 400 total employees. The company
“We do not expect to recover the full value of our lease obligations.”
Tim Regan, Dropbox chief financial officer
focuses on rare genetic diseases and operates a portfolio of subsidiaries that research drugs.
Dropbox appears to be taking a loss on its subleases to both BridgeBio and Vir.
BridgeBio signed a fiveyear sublease with minimum rent of $11.2 million, according to a Securities and Exchange Commission filing.
That comes out to $42 per square foot annually, less than what Dropbox is paying in its original lease for the building, according to corporate filings. Vir is paying $47.44 per square foot in base rent with 3% annual escalations.
Dropbox’s 2017 lease requires rent payments of $848.3 million over 15 years, with starting annual rent of $62 per square foot that escalates to $93.78 at the end of the lease.
“We do not expect to recover the full value of our lease obligations,” said Tim Regan, Dropbox chief financial officer, on a February earnings call. The company reported a loss of $398 million in the fourth quarter related to its shift to remote work and subleasing its real estate. That could rise by another $50 million this year, Regan said.
Dropbox’s lease is subject to additional costs including taxes, insurance and maintenance, according to corporate filings. BridgeBio and Vir’s subleases are structured in the same way, known as a triple net lease, according to a person with knowledge of the deals.
In January, Dropbox had 315 layoffs, or 11% of its workforce, to streamline its teams, including consolidating product development, technology and market teams. Olivia Nottebohm, Dropbox chief operating officer, also left the company.
“Last spring I made a commitment to all of you to preserve job security through 2020, and it was important to me that we honored that promise,” CEO Drew Houston said in a public memo to employees. “But looking ahead at 2021 and beyond, it’s clear that we need to make changes in order to create a healthy and thriving business for the future.”
BridgeBio also leases 3,900 square feet at its Palo Alto headquarters, a 10,000squarefoot office and 10,500squarefoot office in San Francisco, and a 20,000squarefoot Montreal facility.
Tech and biotech companies are increasingly becoming neighbors.
Earlier this month, medical genetics company Invitae leased around 40,000 square feet of lab and office space at 444 De Haro St. in Potrero Hill, about a halfmile west of the Exchange.
The building is also the headquarters of fastgrowing messaging software company Discord.