Pinterest to bail out of SF offices in SoMa

In another tech downsizing, San Francisco-based Pinterest will shed offices in South of Market.

The image-sharing firm will not renew its lease for two floors at 410 Townsend Street, the San Francisco Business Times reported.

The 90-year-old offices will be available for lease in June, according to marketing materials. The four-story building is owned by Clarion Partners, which bought it for $85.6 million in 2019.

Pinterest was among the first tech companies to put the brakes on office expansions at the dawn of the coronavirus pandemic – signaling an about-face on the need for offices in a new era of remote work.

Months after the pandemic forced offices to close in San Francisco and elsewhere in 2020, Pinterest paid nearly $90 million to terminate its lease for 490,000 square feet at 88 Bluxome Street after re-evaluating its real estate needs.

Before the outbreak, Pinterest had planned to move 3,0000 workers into the unbuilt 1 million-square-foot mixed-use development in SoMa.

The controversial development, slated to replace the San Francisco Tennis Club, was expected to be completed this year, but hit headwinds that prevented it from breaking ground. They included Pinterest foregoing its pre-lease and a lawsuit seeking to stop Alexandria Real Estate Equities from selling the entitled project.

The Pinterest pull-back was seen as a wake-up call by real estate experts ahead of office downsizing by other Bay Area tech companies now opting for hybrid workplaces.

Pinterest now leases 150,000 square feet at 505 Brannan Street and a 120,000-square-foot office at 651 Brannan Street nearby. Both are within walking distance of the abandoned destination on Bluxome, according to the Business Times.

Pinterest finds it “increasingly difficult” to navigate its workplace culture as the company transitions to a flexible work model, with most of its employees working remotely, according to a recent regulatory filing.

San Francisco’s office vacancy rate now hovers at 25 percent, up from single-digit rates before the pandemic. Its “availability rate,” which includes subleases, was more than 27 percent. In addition, as many as 1,300 Downtown office leases are expected to expire in 2024, with the lion’s share in tech.

Office vacancies could reach between 35 percent and 50 percent in certain parts of Downtown, real estate experts say, assuming current market conditions continue and office tenants decline to renew existing leases or sign new ones.

In that scenario, nearly 43 percent of the office space in SoMa could sit vacant by 2024, the Business Times reported.

— Dana Bartholomew

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