Microsoft trying to sublet its office space
Microsoft has listed up to 49,000 square feet for sublease in one of San Francisco's tallest towers, 555 California St.
The tech giant is offering sublease space as small as 4,500 square feet up to 49,000 square feet, with a term through May 2029, according to marketing materials viewed by the Chronicle.
The move comes weeks after the company opened a new artificial intelligence lab in the offices, where it is offering free co-working space for clients in the fastgrowing industry. Microsoft-owned LinkedIn also just listed part of its 222 Second St. offices for sublease in South of Market and laid off 668 employees.
The moves underscore that cost-cutting is continuing in the tech sector a year after mass layoffs began and remote work remains entrenched. They come at a time when some AI companies are growing, but not enough to offset the city's growing office vacancy rate, which hit a record-high 34% in September.
Microsoft didn't immediately respond to a request for comment. San Francisco Business Times first reported the sublease listing.
Vornado Realty Trust and former President Donald Trump own the 779foot-tall 555 California St., the former global headquarters of Bank of America, which is still a tenant.
Executives at Vornado have highlighted the property's strength as they seek to address an $840 million loan.
“All of the important financial services tenants and clients are in our building, and have been there for 25 years and more. So the building is sort of unique, it's the highest quality and it's by far the most important financial services building,” said Steven Roth, CEO of Vornado, on an August earnings call.
Other tenants include Goldman Sachs, Morgan Stanley, consultancy McKinsey & Co. and private equity giant KKR.
The building was 94.5% leased as of July and recent leases were completed upward of $120 per square foot annually, about double the typical price of a lease in San Francisco, according to Vornado.
Real estate brokers and landlords have said there is a “flight to quality” in the age of remote work, where the highest quality buildings with modern spaces and strong amenities — such as views — are outperforming the rest of the market.