Posts Tagged ‘Sublease’
A Tale of 3 Spaces
Why would a trophy asset downtown be priced lower than a brick building in SOMA? While the last downturn centered in SOMA, this financial crisis has most strongly impacted the financial district. Rents are dropping north to south in the city and a majority of the sublease space, which drives down rents, is in the financial district. Tech companies were hit later in this cycle and are starting to list subleases in SOMA (Yahoo, LiveJournal, Slide etc), which will continue to pull SOMA overall rents downward going forward. Through three spaces, let’s examine your pricing options today.
– Financial District Option: 101 California 19th floor sublease through 10/31/12, trophy asset in the heart of downtown at California and Front, access to all forms of transportation and abundant amenities, high end build out with wood floors mostly open with conference rooms/private offices, all furniture included, asking $28 FS/square foot/yr. 101-california-sublease-flyer-19th-floor2
– South Financial District Option: 217 2nd Street 3rd or 4th floor, brick building near 2nd and Howard next to the CNET/now CBS building, First Round Capital a floor above, all open needs improvements, no furniture, asking low $30sFS/square foot/yr 217second-street1
– SOMA Option: 139 Townsend 5th floor, brick building at Townsend and 2nd across from Tres Agaves in the heart of SOMA/SF tech community, mostly open with conference room/private offices, asking mid $30sFSE/square foot/yr 139-townsend-sublease-flyer
Based on the above comparison, if you decided to lease 101 Cal over 139 Townsend, you would save an estimated $57,000 per year in rent. The above amount does not even include the out of pocket expenses associated with buying furniture and cabling the SOMA alternative. The above comparison can be found in smaller and larger spaces as well and demonstrates the point that teams should be evaluating if their location preference is a nice to have or need to have.
If your company has always been located in one area and you are contemplating a move. I would suggest doing an employee map. This will plot all of your management and employees by division on a map, so that you can understand where your employees come from and what type of transportation options they are using. We can provide this service to you. In these tough times, saving money is a strong priority for most companies, and being open to evaluating other submarkets can help you accomplish that goal.
Yahoo vacates 400,000 sf
Yahoo plans to vacate 400,00 sf of Class A Santa Clara office space. The asking rate is $1/sf and term is through July of 2010. While the rate is adjusted for a short term, to provide some context the average Class A asking rent in Santa Clara Q4 2008 was $3.21/sf. Since real estate decisions lag behind layoffs and general economic malaise, expect this trend to continue. See below article for more information.
Yahoo Vacating 400,000 sf in Santa Clara
Silicon Valley / San Jose Business Journal – by Katherine Conrad
Yahoo Inc. is vacating almost 400,000 square feet in two shiny eight-story towers visible from U.S. Highway 101 in Santa Clara.
The troubled search engine company is offering the prime Class A space on Mission College Boulevard to the market for a paltry $1 a square foot.
“These buildings are as good as it gets,” said Mike Field, director of real estate for the Sobrato Organization, which owns the two structures built in 2000.
“This is plug and play,” he added, using the real estate term for move-in ready.
Yahoo plans to vacate by May. Because the remaining time left on the lease is so short – it expires in July 2010 – Field said the Sobrato Organization will be involved in negotiations with a new tenant.
The addresses of the buildings hitting the market are 2811 Mission College Blvd., a 200,500-square-foot building, and 2821 Mission College, a 184,000-square-foot building, and they include a cafeteria and gym.
Field said Yahoo plans to consolidate in the remaining buildings in Santa Clara, also owned by Sobrato, and in their Sunnyvale campus, which the company owns.
Yahoo (NASDAQ:YHOO) didn’t immediately respond to requests for comment.
The company on Tuesday reported a $303 million, or 22 cent per-share fourth quarter loss, compared to net income of $206 million, or 15 cents a share in the same period last year.
Yahoo had $1.8 billion in revenue, down slightly from the year-ago quarter’s $1.83 billion.
Analysts expected, on average, earnings of 13 cents a share on $1.37 billion in revenue.
The quarter was former CEO and co-founder Jerry Yang’s last full reporting period. Carol Bartz, the former CEO of San Rafael-based Autodesk Inc., was named CEO earlier this month.
Katherine Conrad can be reached at 408.299.1820 or kconrad@bizjournals.com.