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Facebook and TikTok are looking to expand by nearly 1M SF combined in Silicon Valley, signaling tenants “are committed to the office,” according to Boston Properties CEO Owen Thomas.
Thomas said in an Oct. 27 earnings call that Facebook is looking to add 700K SF and TikTok’s parent company, ByteDance, is looking for up to 300K SF in Silicon Valley.
“These examples support our repeatedly stated position that tenants are committed to the office as their location of choice to collaborate, innovate and train, all critical for their long-term success,” Thomas said in the Q3 conference call.
Boston Properties owns about 8M SF in the Bay Area, including Salesforce Tower and Embarcadero Center in San Francisco, making it the largest landlord in the city. The company owns more than 51M SF of real estate across the U.S.
These potential expansions would mark a positive sign for the region’s office market, which has struggled to recover in the wake of the coronavirus pandemic. Boston Properties’ Bay Area properties were about 18% occupied last quarter in terms of actual office usage, the lowest in the company’s portfolio, the company said on the earnings call. New York is leading occupancy at 52% usage.
“The urban downtown recovery in San Francisco continues to lag our other markets,” President Doug Linde said during the call. He said he believes that is in part due to ongoing remote work trends and a strict mask mandate, which was eased on Oct. 15. This slow office return has in turn slowed restaurant and retail spending, according to the San Francisco Chronicle.
Thomas said Covid-19 had “the biggest impact on San Francisco of all the markets where we operate,” but that hasn’t hampered the city’s reputation as the “technology capital of the world.”
“It’s got the largest cluster of computer science workers certainly in the United States,” Thomas said. “And we believe in the long-term recovery of the San Francisco market, but I do think it will lag our other markets.”
Thomas also provided an update on the company’s planned Fourth and Harrison development in Central South of Market, which has been stalled as a result of the pandemic. The firm bought the land for the planned office project for $140M last year, according to The Chronicle; Thomas said he now expects construction to start as soon as next year. The company received city approvals for the 820K SF project in 2019.
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