WeWork signs biggest lease of Q1 in San Francisco

WeWork just added 251K SF to its San Francisco footprint.

The co-working provider inked the city’s largest lease of the first quarter at the Union Bank Building with landlords Kennedy Wilson and Takenaka Corp., the San Francisco Business Times reports. WeWork signed an 18-year lease for all 20 floors and plans to renovate the building.

The JV bought the building at 400/430 California St. in 2016 for $135M when it was fully leased to MFUB Union Bank, which plans to vacate the building.

The co-working company began occupying it newest location this year at Salesforce Tower, where it leases 75K SF. WeWork has rapidly expanded its Bay Area footprint in recent years and signed leases for over 1M SF in 2017. It also has expanded into Oakland, San Jose and Mountain View within the last two years.

WeWork Managing Director for U.S. and Canada West Jon Slavet told the San Francisco Business Times that the company cannot keep up with demand in the Bay Area, where its community is now over 13,000 members. Its members range from startups to enterprise businesses.

WeWork plans to open its first phase at 430 California during Q1 2019.

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Central SoMa Plan Could Add 11 Stories To Pinterest’s HQ

If the city moves forward with an ambitious plan to guide office and housing development in Central SoMa, Pinterest hopes to add a vertical 11-story addition to its headquarters at 505 Brannan St.

A proposal filed by TMG Partners, one of the original six-story building developers, includes an 11-story addition that would add 165,000 square feet to the site and bring its height to 240 feet.

The current building offers 129,450 square feet in office space and is 85 feet tall, but the site is permitted for a structure 250 feet tall, according to SF Planning documents.

The addition is anticipated to cost $38 million.

Read the full article from Hoodline

Why WeWork is giving away free office space in S.F. and 10 other cities

After more than tripling its Bay Area footprint last year, WeWork is now ramping up its philanthropic efforts.

The co-working startup is providing free office space for 10 entrepreneurs who are military veterans for six months in San Francisco and 10 other cities. The program, Veterans in Residence, is a partnership with BUnker Labs, a Chicago-based nonprofit incubator for veterans. It’s the first time WeWork has provided free space in multiple cities through a national program.

In WeWork’s 25 Taylor St. office in the Tenderloin, a 10-seat office that is normally priced at $5,800 per month is now operated by Bunker Labs. In the country’s most expensive office market, it’s a rare offering of new, free space.

Finding affordable office space is “incredibly expensive. It’s time-consuming. It’s difficult,” said Mike Nemke, a former member of the U.S. Army Special Forces who served in the Middle East and joined the veterans program. Nemke is co-founder of a data science startup, Datamyne.ai, and MKTR.ai, which provides marketing and consulting to other startups.

Read more from San Francisco Business Times

 

 

Small tech companies finding niche in San Francisco office

Large blocks of space are in high demand among Bay Area tech companies expanding into and within San Francisco.

However, startups and small tech companies from outside of the Bay Area are carving a niche within the city as well. Some are taking advantage of leasing smaller office blocks or moving into co-working space as an entry into the city’s office industry.

“San Francisco continues to attract startups that are in hyper-growth mode,” Kilroy Realty Senior Vice President, Asset Management Rick Buziak said in a press release.

Tel Aviv-based AppsFlyer opened an 11K SF U.S. headquarters in mid-February at Kilroy Realty’s 100 First St., where Okta signed a 207K SF lease in December. The South of Market office offers capacity for further growth. The mobile attribution and marketing analytics company recently secured $56M in Series C financing. The office on the 25th floor offers an open-office plan.

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San Francisco may ease up on allowing retail space to be converted to offices

As San Francisco landlords struggle to fill vacant retail space, city officials may allow conversions to office space.

San Francisco’s Planning Commission will discuss a plan tomorrow to ease up on retail-to-office conversions in downtown San Francisco. The idea is for the city to become more flexible as the national retail market grapples with huge shifts.

The move would help fill empty space and address the city’s huge office crunch, which has sent commercial rents skyrocketing, disproportionately hurting small businesses and nonprofits. The planning department currently has four applications on file — including the huge, vacant 6×6 retail center in Mid-Market — to shift existing upper-level retail space to office use.

The proposal came after planners rejected a proposal to convert the third floor of the former Loehmann’s department store at 222 Sutter St. to office space. Planners wanted to avoid losing sales tax that retailers generate for the city, but critics pointed out that vacant space doesn’t generate sales tax.

The importance of retailers for the city’s budget is clear: Union Square merchants generate more than 37 percent of the sales tax that the city gets from consumer goods. Those same retailers generate more than 15 percent of the city’s total sales tax funds, according to a new retail report from the Office of Economic and Workforce Development.

As part of a revised downtown plan, planning commissioners are considering loosening restrictions on retail-to-office conversions above a property’s third floor. Changes the planning department is recommending would still prohibit non-retail sales from occupying a building’s first through third floors. Above the third floor, however, offices would be allowed if the leases encompass 5,000 square feet or less. For offices that want to lease more than 5,000 square feet, the deal would require a conditional use permit.

Read more from San Francisco Business Times

Exclusive: Developer associated with Soho House closes on S.F. Armory building for $65M

A developer associated with private club and hotel operator Soho House has officially purchased a storied San Francisco building for a whopping $65 million.

SF Armory LLC, an entity affiliated with Chicago developer Benjamin Weprin, who previously developed Soho House’s Chicago facility, closed on the Mission’s former National Guard Armory, according to a deed filed with the city Jan. 26. Transfer taxes for the building were nearly $2 million.

The San Francisco Business Times originally reported in November that the upscale social club had been scouting for a place to land in San Francisco and was slated to take over the 200,000-square-foot building at 1800 Mission St., a site which has been used as an S&M porn studio and headquarters for the building’s owner, Kink.com — an arm of Armory LLC, which bought the building for $14.5 million in 2006.

However, in a statement after the article published, Soho House denied that it was attempting to move into the Armory building, and told multiple other news outlets that the story “was not true.”

“We love San Francisco, however, we don’t have a space confirmed as of now,” a Soho House spokesperson told SFGATE.

Read more from San Francisco Business Times

 

Supervisors To Call For Stricter Enforcement Of Commercial Vacancy Laws

A report concluding that ordinances for vacant commercial spaces haven’t produced significant results will be up for discussion at a Board of Supervisors’ Land Use and Transportation committee hearing on Monday.

The study, commissioned by Supervisor Norman Yee (District 7), shows that since the Board adopted a Vacant or Abandoned Building Registration Ordinance in 2009 and a similar measure in 2014 for commercial properties, the number of empty storefronts hasn’t been substantially reduced.

“In my district and across the city, storefronts left vacant for not only months, but years, have a terrible impact on surrounding businesses, the feel and even safety of a neighborhood,” said Supervisor Sandra Lee Fewer in a statement.

The vacant and abandoned building registration program is managed by the Department of Building Inspection (DBI), but many owners don’t comply, and it’s not strictly enforced, according to the report.

Read more from Hoodline

Strong Economic Indicators Present In All Of San Francisco CRE

San Francisco’s commercial real estate market shows many positive signs for growth in 2018.

Multiple CRE products are going up right now, which is relatively uncommon, according to Vanguard Properties Director of Investment Sales Alex Kolovyansky, who spoke during a recent Bisnow event.

Office, industrial residential and hotel are all experiencing up cycles, Kolovyansky said.

“The San Francisco residential market has been growing by leaps and bounds,” he said.

In 2017, 6,500 transactions were completed in the residential market, of which 35% were for homes and 51% were for condos. A very small percentage of the transactions were for investment properties and 2.3% were for apartment buildings. Kolovyansky said 147 old and new apartments traded last year.

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Downtown Corporate Campuses are Expanding into the Suburbs

One of the most important development trends in recent years has been the push to redevelop, reenergize and revitalize downtown districts in cities and towns across the country. Aligned with a demographic wave (led by millennials, empty nesters and active seniors) displaying a renewed appreciation for and attraction to the live/work/play dynamism that dense, mixed-use urban centers can provide, developers have become more aggressive and more adept at transforming underutilized urban neighborhoods in vital and energized centers of commercial and social activity.

Read more from National Real Estate Investor

Here are the Bay Area’s 10 biggest building sales of 2017

San Francisco and the rest of the Bay Area saw another banner year for building sales in 2017. Giant foreign investors, pension funds and private equity firms bought towers in the heart of downtown San Francisco and more suburban areas for record prices.

The big deals weren’t just limited to tech offices and Oakland’s investment market remains hot.

Read more from San Francisco Business Times