The tech giant will not renew its 300,000-square-foot lease at One Market, consolidating its office space.
Google has announced that it will not renew a lease for 27,000 square meters of office space it has occupied since 2018 at One Market Plaza on San Francisco's waterfront.
One Market Plaza is one of the largest office buildings in San Francisco. It consists of two towers and an 11-story annex known as the Landmark, totaling $1.6 million. The complex is jointly owned by Blackstone and the Paramount Group.
When its lease expires in April, Google will move out of One Market's 42-story Spear Tower but will continue to use space in the smaller Landmark building as the tech giant consolidates its office presence in the city, the San Francisco Chronicle reported.
A Google spokesperson told the newspaper that the company is “focused on investing efficiently in real estate to meet the current and future needs of our hybrid workforce,” adding that Google remains “committed to its long-term presence in San Francisco.”
According to the report, Google plans to consolidate much of its operations from One Market into the nearby 345 Spear Street building, where the search engine giant has leased about 37,000 square feet. Google is expected to renew its lease on the Spear Street building next year.
In January, Paramount and Blackstone secured an extension of a $975 million loan for the One Market Complex, which was due to mature the following month.
According to the Chronicle, the partners negotiated an agreement that included a three-year extension of the loan with an option for an additional year. In return, they paid $125 million toward the debt that was due.
Although the complex at 1 Market Street on the Embarcadero was placed in the hands of a special servicer prior to the negotiated loan extension, the partners described the transfer as “purely a procedural step necessary to effect a change in the loan term, which required the approval of the special servicer.”
In a joint statement to GlobeSt.com in January, Blackstone and Paramount emphasized that the One Market complex outperformed other office properties in the San Francisco market.
“This property is approximately 96% occupied, has experienced the highest direct leasing volume of any office building in San Francisco over the past three years, and has recently signed leases at rents above pre-COVID levels,” a spokesperson for the two companies said.
“Our continued belief in the strength of this prestige asset is demonstrated by our decision to invest additional capital in it,” the spokesperson said. “Recent leasing activity has enabled One Market Plaza, which offers unobstructed views of the bay, to achieve net rent that is 20% higher than other prestige office buildings in San Francisco.”
According to data from CBRE, San Francisco's overall office vacancy rate reached 36.6% in the first quarter, with overall availability rising to 38.7%.
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