Airbnb, after years of shedding corporate real estate, is joining a growing number of companies not cutting space as rapidly as they had signaled they might.
The San Francisco-based tech company is shopping around for up to 250,000 square feet of new office space in the Bay Area city, a company spokesperson confirmed to CoStar News.
While the space requirement, for which it has enlisted property brokerage CBRE to help, is slightly smaller than the roughly 280,000 square feet it currently leases for its headquarters at 888 Brannan St., it's a sign that Airbnb is committed to retaining its physical space even as it has been pushing what it calls a permanent adoption of flexible work.
"Our current lease at 888 Brannan is more than three years from expiration and we have not made a decision on possible relocation," an Airbnb spokesperson said of the requirement, which was earlier reported by the San Francisco Business Times. "We are simply exploring options, given the lead time needed for this decision to be made."
The company added that it would not need any new space until the lease for its Brannan Street office expires in 2026, and it remains unclear whether Airbnb will stay close to its hub in San Francisco's Showplace Square neighborhood or venture elsewhere.
It has been headquartered in the area for more than a decade, according to CoStar data, and Airbnb last year extended its initial nearly 11-year lease term with landlord TIAA Global Real Estate.
Correcting the Overcorrected
As companies gradually step up their enforcement of in-office time, some are beginning to realize that they may be moving toward offloading more space than they will need. While they probably won't be hunting for the large blocks of space that were leased prior to the pandemic, the renewed demand can help boost markets such as San Francisco or New York that have been battered by arrested leasing volume and falling property valuations.
"There is the possibility that companies have overcorrected on the contraction side," Colin Yasukochi, the executive director of CBRE's Tech Insights Center, told CoStar News. "As employees come back more days per week, there could be pent-up demand in the market."
Office vacancy rates across the greater San Francisco area, for example, have climbed from about 7% in 2019 to its current average of about 20%, according to CoStar data. In some areas of downtown there's even more available space as companies such as Meta, Salesforce and Slack have dumped major chunks of offices on an already over-burdened sublease market.
The city, previously the most expensive office market in the country, has lost its standing to Silicon Valley's San Jose as average asking rents have fallen to about $57 per square foot from a high of roughly $75 a square foot reported in mid 2019, according to the data.
For Airbnb, it's unclear how the new space requirement will impact its complete footprint in the San Francisco area. The company was one of the earliest adopters of a permanent flexible-work structure, which last year gave employees the ability to live and work from anywhere in the world. The home-sharing giant has also been far more lenient about its in-person requirements, standing out against some of its fellow tech giants such as Apple or Amazon that have pushed for stricter return-to-office mandates.
With its employees scattered around the globe, the company in recent years has offloaded roughly 600,000 square feet from its previously vast corporate portfolio in the San Francisco Bay Area.
Shortly after Airbnb put an entire 150,000-square-foot office building at 999 Brannan St. up for sublease in late September 2022, the home-sharing company also began hunting for takers to fill about 300,000 square feet across two buildings in the Silicon Valley suburb of Santa Clara, according to Cushman & Wakefield marketing materials. The properties at 4301 and 4401 Great America Parkway are the latest sublease listing Airbnb has flooded to the Bay Area office market.
Since 2021, the company has offloaded space in six buildings it occupied prior to the pandemic, spending more than $110 million on impairment charges related to the terminated deals and closed offices.