Pinterest recently joined the growing list of companies that has terminated a lease during the COVID-19 pandemic, according to multiple news outlets. The photo-sharing platform announced it ended its approximately 490,000 square foot office space lease that was going to be constructed near its current San Francisco headquarters campus. The company is expected to continue to lease its current buildings in downtown San Francisco instead.
The complex, 88 Bluxome, is expected to comprise two office high-rises, ground-floor retail shops, 12 indoor tennis courts and several swimming pools.
The company will pay $89.5 million in the third quarter to break the lease. While it’s a hefty fee, the almost $90 million payout is much less than the $440 million of future minimum lease payments Pinterest would have had to make if it moved forward with the campus.
“As we analyze how our workplace will change in a post-COVID world, we are specifically rethinking where future employees could be based,” Pinterest CFO and Head of Business Operations Todd Morgenfeld said in a statement “A more distributed workforce will give us the opportunity to hire people from a wider range of backgrounds and experiences.”
Is Pinterest’s departure a sign of things to come?
Pinterest’s decision to terminate its lease could be an indicator for how other Bay Area tech companies may operate going forward. Facebook, Apple and Twitter have already said its work-from-home policies may extend well into the future—even after the COVID-19 pandemic ends. Twitter CEO Jack Dorsey announced employees will be permitted to work remotely permanently if they choose.
If the other tech companies follow Twitter’s lead, the Bay Area’s demographics could change, too, according to SFGate. A recent technology employee survey revealed that two thirds of the respondents would leave the area permanently if they could work from home.
Meanwhile, the San Francisco area has recorded almost 1.1 million square feet of negative absorption in the second quarter of 2020, according to a Kidder Mathews report.
“The Pinterest lease termination is a reflection of corporate views of the present and the future,” Carla Scimemi, senior vice president & shareholder at Kidder Mathews, told Commercial Property Executive. “A San Francisco office presence will continue to be important—but it’s a signal that present productivity levels are acceptable and future productivity may not be negatively impacted by considering other markets or virtual platforms.”
Pinterest’s recent lease termination is not the end of technology companies’ desire for physical locations however. Video-sharing app TikTok signed a 10-year lease at the One Five One skyscraper in Manhattan and Facebook leased 730,000 square feet of office space at The Farley Building in Manhattan, Commercial Property Executive reports. Meanwhile, Amazon announced last month it will invest $1.4 billion in expansion hubs across the U.S.
Joe Dyton can be reached at firstname.lastname@example.org.