Twitter is putting up a quarter of the space at its San Francisco office complex for sublease. This indicates the rising amount of excess office space available in the region as the tech industry in the region struggles to grow, reports Bloomberg.
Twitter subleases part of San Francisco headquarters
According to marketing materials from Cresa, a commercial real-estate firm, about 78,800 square-feet (7,320 square meters) on the seventh floor of 1355 Market St. is up for sublease. Also in a nearby building at One Tenth St., 104,850 square-feet of space on three stories is available. Twitter’s sublease plans were first reported on Monday by the San Francisco Business Times.
“We’re always looking at ways to use our office spaces more efficiently and effectively,” a Twitter spokeswoman said in a statement. “We remain committed to our home in San Francisco’s Mid-Market area.”
According to brokerage Cushman & Wakefield Inc., the micro-blogging firm has around 683,000 square-feet rented at both of its buildings. In 2012, Twitter shifted to its Mid-Market central station after a threat to leave the city which provoked San Francisco lawmakers to support a payroll tax break for companies that migrate to less-popular zones. Other tech firms like Zendesk and Yammer joined Twitter, while Uber and Square moved to an office building a block away but were not qualified for the tax break, says Bloomberg.
Rising use of subleasing
Even as the city’s overall office market stays solid, additional space is a warning that some companies overestimated their development rate and now are being compelled to downsize. The concept of subleasing is turning out to be more widespread in San Francisco as investments drop and tech firms moderate their hiring spree, says Bloomberg.
San Francisco’s office accessibility rate, which includes possessed space being effectively promoted for sublease, rose to 11.7% in the second quarter, up from 10.8% in the first quarter, as indicated by brokerage CBRE. In the second quarter, the city’s vacancy rate was 6.3%, versus 6.2% in the first quarter.
For the past several quarters, Twitter has been witnessing slower-than-anticipated growth and executive turnover as well. The micro-blogging giant has lost a third of its market value in a year. It axed about 8% of its workforce toward the end of 2015 with the aim to become more efficient in spending.
On Monday, Twitter shares closed down 0.33% at $18.20. Year to date, the stock is down more than 18%, while in the last year, it is down almost 33%. The stock has a 52-week high of $31.87 and a 52-week low of $13.73.