Landlords try to rent trophy SF offices before Google lease expires

Paramount and Blackstone, owners of One Market Plaza, look for tenants to fill 14 floors

Blackstone's Stephen Schwarzman, Paramount Group's Albert Behler and 1 Market Street (Getty, Google Maps)
Blackstone's Stephen Schwarzman, Paramount Group's Albert Behler and 1 Market Street (Getty, Google Maps)

The co-owner of San Francisco trophy office complex One Market Plaza has advertised 14 floors for direct lease, even though Google has a contract to occupy the space until next year.

Paramount Group, which owns the Spear Tower at 1 Market Street together with Blackstone, has put nearly 320,000 square feet on office listing sites, The San Francisco Business Times reported. Google’s lease doesn’t expire until April 2025.

The Mountain View-based search giant said last month it would leave the 43-story Spear Tower this year. The tower is one of three structures that constitute One Market Plaza. Google plans to relocate Spear Tower employees to other Google offices in San Francisco.

The company occupies more than a fifth of One Market Plaza’s rentable space, based on CMBS data, so its exit would significantly empty the premises.

Office vacancy in the Downtown San Francisco market was 36.3 percent in the first quarter, according to a report from Savills.

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A spokesperson for Paramount and Blackstone told the Business Times the two landlords have started discussions to look for new tenants.

“This trophy asset continues to generate leasing demand at record rent levels,” the spokesperson said in an email.

Within the San Francisco office market, the trophy segment has performed the strongest because of the flight to quality trend among users, Robert Sammons, senior director of research at real estate services firm Cushman & Wakefield, told the business newspaper.

Trophy buildings “will be fine, at the end of the day,” Sammons said, adding that the fate of Class B office space is less clear.

Google has other offices leased in the city. It plans to retain its footprint in Landmark at One Market, an 11-story building next to One Market Plaza. The company’s lease for more than 250,000 square feet at the Landmark runs until 2029, according to regulatory documents filed by American Assets Trust, the real estate investment trust that owns the building.

– Joel Russell