Google has signed another office lease in the southern San Francisco Financial District, according to the source.
The company of Mountain View is taking an extra 57,299 square feet at Hills Plaza at 2 Harrison St., according to real estate company CoStar. That brings the total on the complex, where Google has had an office since 2007, to more than 400,000 square feet. Architecture firm Gensler occupied the space before recently moving to 45 Fremont St. A Morgan Stanley investment fund owns Hills Plaza.
In addition, Google is debating about subleasing a space from Salesforce, two different sources said. The potential deal could be up to 228,000 square feet at Rincon Center at 101 Spear St. No contract has been signed. Salesforce is one of the few large tech tenants vacating space as it consolidates workers into Salesforce Tower, which opened in January, and adjacent buildings. Salesforce, the city’s largest tech employer with 7,500 employees, is also subleasing space at the Landmark building at One Market Plaza.
Google’s expansion will follow other companies to lease offices like Facebook, Dropbox, and other fast-growing tech companies. Those companies have broken records for size and made San Francisco one of the priciest and tightest office markets in the country.
The office vacancy rate in San Francisco’s southern Financial District, which includes the area around the Transbay Transit Center, is 4.6% down from 6% in the 1st quarter, according to CoStar.
Google has huge spaces in the area, with almost 1 million square feet of space leased and owned at One Market Plaza, 121 and 345 Spear St., 188 the Embarcadero and 2 Harrison St. Yet that represents just 5% of its Bay Area office holdings.
The dearth of space has caused San Francisco office rents to rise for the first time in 2 years, to $75.50 per square foot annually, said Colin Yasukochi, director of research in Northern California for brokerage CBRE.
“The amount of available office space … has continued to decline”, said Yasukochi. “It’s especially acute for tenants seeking 100,000 square feet or more.”