Dropbox agrees to pay to vacate part of HQ
Dropbox has reached an agreement to surrender more than a quarter of its San Francisco headquarters to the building’s owner, according to documents filed Friday with the U.S. Securities and Exchange Commission.
The tech company’s lease amendment permits it to vacate 165,244 square feet of its space at 1800 Owens St. in the city’s Mission Bay neighborhood in exchange for a termination fee totaling $79 million.
The relinquishment will occur in three phases: first, approximately 52,000 square feet and $28.1 million in fees this quarter, followed by 54,000 square feet and $14.9 million in the second quarter of 2024, and finally, 59,000 square feet and $36 million in the first quarter of 2025.
“As we’ve noted in the past, we’ve taken steps to de-cost our real estate portfolio as a result of our transition to Virtual First, our operating model in which remote work is the primary experience for our employees, but where we still come together for planned in-person gatherings,” a company spokesperson told CNBC in an emailed statement.
The shift is anticipated to reduce Dropbox’s rental expenses by around $137 million and building maintenance costs by $90 million.
Since adopting a remote work policy early in the coronavirus pandemic, the cloud storage company faced challenges in occupying its 750,000-squarefoot property at 1800 Owens in the once-booming Mission Bay neighborhood.
Earlier this month, Dropbox subleased 30,000 square feet to Siren Biotechnology, a startup focused on immunotherapy and gene therapy. The property, formerly known as The Exchange, changed hands in a $1 billion sale in 2021. It is now called Icona after its new owners transformed it into a lab space from its original office configuration.
This move aligns with Dropbox’s strategic plan of consolidating its physical footprint. At the end of 2020, Vir Biotechnology took 133,896 square feet listed for sublease by Dropbox.
In April, Dropbox cofounder and CEO Drew Houston announced the company would reduce staff by 16% as part of costcutting measures.
“We need to acknowledge some other hard truths,” he said. “In some areas, investments that showed promise before the downturn have more limited potential today. In others, we haven’t been executing consistently or managing performance as tightly as we need to. So we’ve made more significant cuts in these areas in order to free up investment in our future growth.”
Once this transition is complete, Dropbox will occupy approximately 439,000 square feet at 1800 Owens. In 2021, it said it would like to get that number down to 90,000 square feet.
Last week, neighboring Uber said it is nearing the completion of a subleasing deal with the Microsoft-backed artificial intelligence firm OpenAI for part of its Mission Bay headquarters.
“We’ve taken steps to de-cost our real estate portfolio as a result of our transition to Virtual First.”
Dropbox spokesperson