Waymo has signed a direct lease for 78,000 square feet at 555 Market Street, making a permanent commitment to San Francisco’s Financial District after signing a sublease for the space with former competitor Uber in 2021.
Waymo would not reveal the length or terms of the lease but said via email that, “we believe that we are well set up with the space that we need to run efficiently.”
The Google-owned self-driving car company said that earlier reports referring to a 48,000-square-foot sublease were incorrect and that the nearly 80,000 square feet it will occupy within the building was already available from the sublease.
Uber took about 60 percent of the downtown Paramount Group-owned 21-floor tower between First and Second streets in a 2015 lease, according to the San Francisco Business Times. That amounted to about 175,000 square feet. Uber put that lease and three others downtown up for sublease in 2019 — a total of 730,000 square feet — before moving into its new 480,000-square-foot Mission Bay headquarters in 2021.
The direct lease comes as autonomous taxi services from Waymo and GM-owned Cruise seek regulatory permission from the California Public Utilities Commission to expand their driverless rides to all hours of the day in San Francisco, not just the evening hours currently permitted.
“We are continuing to grow our Waymo One autonomous ride hail service in SF, where we have riders who are already integrating our fully autonomous ride hailing service into their daily lives, and are pleased to have the appropriate space to support our team,” Waymo said.
Waymo is also in the process of getting approval to charge for its driverless rides, not just provide them for free, as it has been allowed to do since 2021. Competitor Cruise was approved to begin charging for driverless rides in less congested areas of the city between 10 p.m. and 6 a.m. last June.
The city has raised concerns about self-driving vehicles, sending a letter recommending “that further restraint and demonstrated improved performance” offered “the best path toward public confidence in driving automation and industry success.” The San Francisco Board of Supervisors recently introduced a resolution supporting a state assembly bill that would ban autonomous cars over 10,000 pounds from operating on city streets without a human safety officer in the vehicle.
CBRE represents 555 Market and did not reply to requests for comment. But if the Waymo direct lease is a sign that some of the city’s numerous subleases may turn into a longer-term commitment, it would be a welcome trend for the beleaguered downtown, where one in three office spaces are now vacant. The city’s Financial District has been hit particularly hard, and saw another nearly 500,000 square feet of negative absorption in the first quarter of 2023, according to a recent Colliers report, with the bulk of that in Class A space.
San Francisco has “incubated and attracted” autonomous car companies like Waymo and Cruise, according to Colliers’ data head Derek Daniels, and the direct lease could be the tip of the iceberg for AI companies taking up some of the vast swaths of office space currently available in the city.
“There is going to be an explosion in AI and there are so many applications and specialties,” he said via email.
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