These 3 Unicorns Went Public In 2019. Here's How They're Doing Now
Three years of remote work and hybrid offices have taken their toll on the San Francisco office market, making the formerly bustling blocks of downtown feel like another planet compared to what they were like in 2019, when offices were bursting at the seams and developers couldn't put up new buildings fast enough.
Those pre-pandemic days of 2019 seem like eons ago, rather than just three years back when a new unicorn was born seemingly every day.
Unicorns — companies valued at $1B or more — didn't just dominate the real estate market in San Francisco, they set the tone for office markets across the country, setting new high-water marks and new trends for office usage and design.
But the pandemic changed all that, shifting the landscape of work, travel, community and commercial real estate.
Bay Area behemoths all had their fortunes changed by the pandemic, and have had to grapple with fluctuating employment rates and uncertainty about the office footprint, leading to ever-present questions about the 2023 outlook as hybrid work shows it’s here to stay.
Uber, for example, received a massive private valuation of $75B in 2019 ahead of its IPO, but the ensuing years have been rough. The company opened with a trading price of $45 per share and ended its first public day at $42. As of mid-December, the company’s stock price sits at $26.08.
Uber adopted a hybrid working model in April of this year, setting a return-to-office date for all of its 35 locations at the end of the month, according to the company’s blog. The company has maintained it would not be cutting jobs, according to The Hill.
However, in 2021, the company started looking to offload some of its massive space at 1725 Third St., its Mission Bay Campus in San Francisco, quietly marketing 300K SF for sublease at the location, according to the San Francisco Business Times.
Large tech companies operated in a “growth-at-all-cost mentality,” according to CBRE First Vice President Caroline O'Loughlin Livermore.
“And they had really been banking space, as an arbitrage play, to make sure that as they were growing their headcount so aggressively that real estate did not become a blocker for them to hit the growth metrics that they were trying to achieve,” she said. “And so that's why you see companies like a Salesforce or Meta, like really had, in the years prior to the pandemic, aggressively taken down a lot of real estate, because they really needed it based on their headcount projections and how the teams were utilizing offices then.”
But those strategies have shifted significantly, due not just to remote work, but to the state of the economy and tech industry overall, though those job losses aren't concentrated in the Bay Area.
“Even, you know, Facebook, the headline, 'they laid off 11,000 people'? Well, not all of those people are based here in the Bay Area,” Livermore said. “So I think the idea that Facebook is just going to get rid of all of its real estate in the Bay Area is probably not going to happen. It's probably not feasible.”
Livermore also said for the companies that are keen on returning to the office, particularly for smaller tech companies or startups, the office leasing environment has never been better.
“I think the opportunities for companies, the leverage has never been, frankly, more in a tenant's favor in San Francisco. I think it's even more aggressive than the dot-com bubble bust in 2001-2002,” she said.
Livermore said the leasing environment in San Francisco may serve as a boon to tech tenants looking to bring people back into the office, even though right now times are tough for the commercial real estate industry.
“I think, you know, it's not necessarily from a landlord outlook perspective, and in a general commercial real estate market perspective for San Francisco, there's some pretty scary stuff on the horizon. But if you're a tenant and you're trying to get something done or you’ve got conviction about getting people back in, the deals are so tremendously aggressive,” she said.
And the pandemic's impact on work hasn't been bad for everyone.
No company has likely benefited more from the shift to remote work than Zoom, which went public right before the pandemic forced a massive chunk of the population into work and school by video conference. Zoom opened at $35 per share, ending up at $65 by the end of its first day. Zoom shares traded at $70.03 as of mid-December.
It has maintained its corporate headquarters in San Jose, where the company leases 66K SF. The company has experienced massive employment growth as well, with 1,702 employees in 2019 ballooning to over 8,000 as of July of this year.
For other unicorns that went public in 2019, it's been a mixed bag.
Pinterest leaned heavily into a remote work policy for full-time employees this year, requiring employees to come into the office once a year for an in-person collaboration. The company has seen its stock stay steady since opening at $19 a share in 2019 and now sits at $23.71. Its employee count as of the second quarter of this year is 3,728 — up from over 2,200 in 2019.
However, Pinterest put the kibosh on its office expansion plans in 2020, paying $89.5M to terminate an office lease at 88 Bluxome St. in San Francisco, citing the shift to remote work. Pinterest will also not renew its space at 410 Townsend St. next year.
The company said it has no plans to vacate its location at 505 Brannan St. in San Francisco but noted in its June quarterly report that one of its ongoing risk factors will be navigating its flexible remote work model for the future, stating, “we also find it increasingly difficult to preserve our workplace culture, including our ability to quickly develop and launch new and innovative products and adequately oversee employees and business functions.”