Facebook expands in S.F., will lease space at Park Tower

Facebook expands office holdings in San Francisco

SAN FRANCISCO -- Facebook is on the verge of signing a lease at the 43-story Park Tower at 250 Howard St., nearly tripling its San Francisco office space.

The company is expected to take up 750,000 square feet -- the entire tower, according to a person familiar with the matter, who was not authorized to speak about the deal publicly. Once signed, it will be the biggest lease of the year in San Francisco, slightly larger than Dropbox's 736,000 square foot deal earlier this year at 1800 Owens in the Mission Bay development.

Facebook, which is headquartered in Menlo Park, has generally kept the bulk of its employees there, but in recent years has spread its footprint to Fremont, Mountain View, Sunnyvale and San Francisco. Last year, the company confirmed it would move Facebook and Instagram staff to 181 Fremont Street, where it leased 432,000 square feet, according to CoStar Group, a firm that tracks real estate data.

Many younger tech employees enjoy living in San Francisco for its nightlife and culture, hopping on company shuttle buses for long slogs on the freeway to work. Some have opted to work for San Francisco companies like Salesforce, Twitter and Uber to cut down on their commutes. So companies like Cisco, Facebook and LinkedIn that once stuck to the South Bay have been opening up offices in San Francisco to better compete for employees.

``Our whole city is turning into a tech central magnet,'' said Jesse Gundersheim, a CoStar market economist.

It is unclear when Facebook will formally sign the Park Tower lease. Chris Roeder, managing director of Jones Lang LaSalle, the building's leasing agent, said in an email Friday that ``no lease has been completed yet.'' Facebook spokesman Jamil Walker declined to comment.

The two towers, taken together, represent a dramatic shift in Facebook's real-estate strategy. For its first decade in the Bay Area, Facebook tried to house its engineers under one roof. In 2015, in the most literal manifestation of that vision, it moved thousands of employees into a Frank Gehry-designed building, which it billed as having ``the largest open floor plan in the world.''

Meanwhile, companies like Google, LinkedIn, Dropbox, Uber, Lyft, and Salesforce gobbled up buildings from Mission Bay to Mid-Market to the Financial District. Rents have soared accordingly,

Though a late entrant into the real-estate rush, Facebook comes with a sizable wallet. At the end of March, it had nearly $44 billion in cash and marketable securities.

With 1.2 million square feet of space right in the heart of the Transbay District, Facebook will have enough space to accommodate more than 8,000 employees. Salesforce, the city's largest tech employer, currently has 7,500 local workers; CEO Marc Benioff has said the company plans to grow its San Francisco workforce to about 10,000. The two companies' engineers, designers and marketers will knock elbows on the sidewalks around Salesforce Tower.

As Facebook's staff continues to grow, the company has sought offices outside Menlo Park, where it already owns or leases 39 percent of the office space, CoStar said. (The figures include ``flex'' space, which can be used for offices or other purposes.)

As traffic increases and housing costs continue to rise, Bay Area tech giants have sought to spread offices to more places, to shorten commutes and offer employees more options. While some companies expand from Silicon Valley north, others head south in search of specific types of talent. Lyft, for example, opened a center for self-driving car research in Palo Alto last year.

``It's a reflection of all the companies wanting to have their employees be able to spend less time commuting,'' said Adhi Nagraj, San Francisco director for SPUR, a civic planning organization.

And given their needs for space, tech companies no longer favor the low-slung offices found South of Market. As new office construction occurred in the new Transbay neighborhood, tech companies are flocking there, Gundersheim said.

On its website, Park Tower notes its views and access to outdoor and open space. The site is a five-minute walk from Salesforce Tower and seven minutes from LinkedIn's Second Street tower.

Those amenities and the location don't come cheap. The average asking rent in the south Financial District is just shy of $70 per square foot a year, Gundersheim said.

``The companies that are willing to (have offices) there are going to pay some premium rates,'' he said.