PayPal Vacating San Francisco Office Amid Financial Struggles
In another blow to the embattled Downtown San Francisco commercial real estate office market, PayPal is reportedly shuttering its office spaces in the city’s Financial District, located at 425 Market St.
PayPal has not officially confirmed the decision, but provided a statement to ABC7 that seems to attribute it to a larger shift to remote work.
“At PayPal, we are continually looking at and evolving how we can work in the most collaborative and efficient ways possible, and we routinely evaluate our global office footprint and spaces to ensure that our company and our employees are best set up for success,” the statement to ABC7 reads. “The pandemic, in particular, has taught us there are many ways in which we can work effectively while providing our employees with flexibility.”
There may be other motives. The move comes at a particularly tough time for the company financially. The company’s stock hit a 52-week low this week, in anticipation of its quarterly earning reports.
TechCrunch reported the decision may also be in part due to San Francisco’s Prop C, which levies a tax on any business in the city that earns over $50M in gross receipts. There has been a growing exodus of tech offices moving out of San Francisco, particularly into Silicon Valley.
PayPal plans to maintain its headquarters in San Jose, according to TechCrunch.
“PayPal remains fully committed to the Bay Area and to California and we will continue to hire into and invest in our business and people working within the state,” the company said in a statement.
PayPal subsidiary Xoom leased 79K SF in 425 Market St. Compstak notes Xoom first leased space in the building in 2013, the year MetLife and the Government Pension Fund of Norway purchased the property.
MetLife declined to comment on this story. Leasing for the property is being managed by Cushman & Wakefield. Cushman & Wakefield also declined to comment on this story.
It is unclear if PayPal terminated its existing lease or is letting the clock run out on its current agreement.
Downtown San Francisco, particularly the Financial District, has been the hardest-hit office market as a result of the pandemic. The continued push and pull between return-to-office and work-from-home has led to speculation that a “race to the bottom” for office could develop, which may be coming to fruition as pandemic regulations wane across the country.