Twitter has stopped paying its rent, auctioned off furniture and let go half of its employees. None of that is helping Shorenstein and JPMorgan refinance a $400 million loan on the company’s San Francisco headquarters.
“Just the amount of headlines that have been on that building cannot be helping them,” said Emily Landes, Bay Area reporter for The Real Deal, adding that lenders don’t want to go near the property.
On the latest episode of TRD’s podcast Deconstruct, Landes breaks down Shorenstein and JPMorgan’s struggles at 1355 Market Street, and how they extend beyond Elon Musk’s social media platform.
Elevated interest rates impacting the commercial market, a general hesitancy to lend on offices — particularly those in San Francisco — and the fact that 75 percent of the 1.1 million-square-foot building is leased to Twitter have all conspired to create “unprecedented headwinds” for its landlords, as Trepp’s Manus Clancy described it earlier this month.
Lenders had reason to worry: Shortly after news broke that Shorenstein and JPMorgan were having issues refinancing, Twitter stopped paying rent on offices around the world. Shorenstein, and another Twitter landlord, Columbia Property Trust, are now suing the tech company for the back rent.
But Shorenstein has a number of other properties in downtown San Francisco, whose office market has struggled with high vacancy rates since the start of the pandemic.
“Downtown is seeing its highest vacancy numbers ever, especially a lot of neighborhoods where Shorenstein owns big buildings,” Landes said.
Listen in as Landes breaks down where things stand now for San Francisco’s office market and more on how Twitter — once hailed as a desirable tenant — is now causing major headaches for its landlords.
Tune into the full episode now on Apple, Spotify and wherever you get your podcasts.