Twitter recently instituted a permanent work from home policy because of the COVID-19 pandemic, but doesn’t mean it wants to see its headquarters go unused, according to the San Francisco Chronicle. The technology company recently announced its 104,850 square foot headquarters is available for sublease.
The space comprises 878 work stations on the third, sixth and seventh floors at 1 10th Street in San Francisco, which is connected to the company’s main building on Market Street. The lease is set to begin in December and last two to five years.
“Our focus on prioritizing decentralization has allowed us to flex our active leased spaces as needed,” Twitter said in a statement. “San Francisco is where a majority of our employees will be based for the foreseeable future, and we will continue to maintain our footprint here.”
What Twitter’s sublease proposal means for CRE
Twitter’s desire to sublease space may not be indicative of what’s going on in commercial real estate on a wider scale. In the Bay Area however, office space isn’t in demand as much as more companies are allowing their employees to work remotely. Fellow technology company Pinterest recently canceled a 490,000 square foot lease in an undeveloped project in the Central South of Market neighborhood because it plans to have a more widespread workforce, according to the San Francisco Chronicle.
Meanwhile, hiring outside of the Bay Area could potentially end the ongoing trend of rent growth and limited office supply. The combination has been great for landlords, but not so much for the tenants. JPMorgan Chase and Shorenstein own the buildings Twitter leases, which are valued at more than $900 million. The work from home trend has raised concerns about what it will do to the city’s economy.
“I know of a lot of companies that are trying to get out of their leases or subleasing space,” San Francisco Mayor London Breed said. “There’s a lot of folks that are looking at this is as an opportunity to walk away.”
Twitter CEO and co-founder Jack Dorsey has wanted to expand beyond San Francisco even before the COVID-19 pandemic hit, however. He was asked if his company’s workforce had diverse life experiences during a 2018 congressional hearing.
“We recognize that we need to decentralize our workforce out of San Francisco,” Dorsey said. “Not everyone wants to be in San Francisco. Not everyone wants to work in San Francisco. Not everyone can afford to even come close to living in San Francisco, and it’s not fair.”
CRE owners outside of Silicon Valley might not have to worry about tenants subleasing space, but they will need to prepare for the fact that some tenants who are working from home may opt to permanently. When that happens, CRE owners will need to show new prospective tenants that their building is worth returning from their remote work environment for.
There was a time when reliable connectivity was enough of a selling point, but now it’s a part of the equation. Tenants don’t want to just be connected, they want to know they’re entering a safe environment. Updated heating and air conditioning systems, hands-free entry points, constant surface cleaning are just a few of the things CRE owners can do to ensure prospective tenants their building safe to work in following the COVID-19 pandemic.
Joe Dyton can be reached at firstname.lastname@example.org.