Uber Follows Wave of US Workplace House Reductions, Dealing Newest Blow With San Francisco HQ Itemizing
Ride-sharing giant Uber’s initially silent attempts to vacate much of its San Francisco office space have grown louder as the company officially lists nearly a third of its new corporate center in the Mission Bay neighborhood.
The move is one of the latest among US firms looking to downsize as executives shift priorities amid an uncertain economy and the rise in hybrid work patterns due to the pandemic.
According to marketing materials provided to CoStar News, Uber is subleasing the entire 300,000 square foot space in one of four buildings it uses for its global headquarters. The company has engaged JLL to find a subtenant willing to take over most of the space, which given the dwindling number of office tenants willing to invest and expand in the city, which has one of the largest land is no small matter highest office vacancy rate in the country, data from CoStar shows.
An Uber spokesman confirmed the listing to CoStar News, adding that the company has never occupied the property developed by Alexandria Real Estate Equities 1725 Third St.
“We are in the early stages of seeking interest in subleasing one of our four buildings in Mission Bay,” the spokesman said. “Since one of our buildings is currently unoccupied, this will not change our footprint in the city or the available space.” Employees. Staying true to our hybrid approach to work that emphasizes personal collaboration, we continue to welcome employees to our Mission Bay campus.”
Uber launched its flexible working policy in late 2022, requiring non-remote employees to be in an office on Tuesdays and Thursdays each week to “maximize the benefits of in-person collaboration,” wrote Nikki Krishnamurthy, Uber’s chief people officer in one company blog post at that time. Employees are allowed to work from anywhere for up to four weeks per year, and the company is offering certain employees some flexibility to continue working entirely remotely.
Uber is leasing more than 1 million square feet for the four Mission Bay properties that will serve as the company’s global headquarters. The company, which has paid about $84 per square foot for the space since 2019, has invested about $160 million in the campus expansion, according to previous DBRS Morningstar analysis and CoStar data.
Data from CoStar shows that rents in San Francisco, still among the highest in the country, currently average about $62 per square foot.
Rumors have been circulating for a number of years that Uber is interested in renting out parts of its new Mission Bay campus, which the company moved into at the height of the pandemic. Uber had privately marketed part of its Mission Bay space, but after a tour with several potential buyers, the company decided not to officially list the space.
Since then, however, the game has changed, as Uber’s renewed focus on profitability rather than expansion reflects similar moves at other big tech companies looking to cut costs.
Alphabet, Meta, Salesforce, and Amazon, to name a few, all saw rising sales, users, and advertising early in the pandemic but are now struggling with a slowing economy and fears of a recession.
Many Silicon Valley tech giants have significantly reduced their real estate portfolios, and will continue to do so, by closing office locations, subletting unwanted space, terminating upfront leases, and withdrawing from future investments. These decisions have caused the Bay Area real estate market to be inundated with millions of square feet of sublet space or downsized offices as leases mature.
National impact includes Chicago, where Salesforce was expected up to 125,000 square feet of office space in his 60-story skyscraper of the same name before moving in. And Facebook parent Meta has shed more than a million square feet of space in the Bay Area and elsewhere in the country, expanding its efforts to downsize expensive real estate after announcing plans for 10,000 layoffs worldwide.
The food delivery business, in particular, has allowed Uber to largely avoid the ride-sharing business that was flagging at the height of the pandemic. However, the company wasn’t immune to factors such as the volatile economy, the impact of a hybrid and more flexible work schedule, and increasing pressure to cut unnecessary spending.
In Chicago, Uber began marketing more than 50,000 square feet of office space, the latest move the company has made in the city’s old Post Office building. The company became the largest tenant in the Loop business district building when it leased 463,000 square feet for the headquarters of its Uber Freight unit in 2019.
Since then, Uber has lost about 100,000 square meters of its original space. This number is likely to increase as soon as the company finds a sub-tenant who is willing to take over the new space.
In addition to several leased properties across San Francisco, in the months leading up to the outbreak of the pandemic in 2020, Uber made nearly 800,000 square feet of space available for subleases at its former headquarters and subsidiary offices as part of its preparations for moving to its new headquarters location from Mission Bay.
These offers were largely seen as a preparation for the city’s future subletting problems, which now boasts one of the highest subletting rates in the country.
San Francisco alone has nearly 12 million square feet of sublet space available — more than 6% of the city’s total stock — still well below New York, whose sublease market accounts for about 31 million square feet, or about 3% of the total office stock, according to CoStar -Data. Compounding the problem is falling demand for office space in and around the city center, where vacancy rates have risen to over 20%, according to data.
