Design software company Autodesk has renewed nearly 93,000 square feet of space at its San Francisco headquarters, representing the largest lease in the city during the second quarter, according to a report from real estate firm CBRE.
The transaction at One Market Street represents a rare bright spot for an office market that has of late been characterized by record-high vacancy rates and mass downsizing by larger companies.
Autodesk has not been immune from that trend. Last year, the company announced plans to move its corporate headquarters from San Rafael to One Market Street in San Francisco, consolidating office space in the city as many companies were looking to decamp.
That move also coincided with a reshuffling of its office space. Last year, the company put 117,000 square feet of office space at 300 Mission St. on the sublease market. A few months later, that was followed by the firm making two floors totaling 73,000 square feet in its corporate headquarters available for sublease.
According to the company’s 2023 annual report, released in May, the company currently leases around 211,000 square feet in San Francisco, with expiration dates ranging from December 2023 to December 2027.
In March, the company announced a hybrid-first work structure dubbed “Flex Forward.” As part of that announcement, Autodesk said it has no plans for corporate return-to-office mandates for hybrid and remote-based employees.
The vacancy rate in the South Financial District, where Autodesk’s headquarters is located, sits at 27.4% compared with 31.6% across the entirety of the city. Average asking rents in the neighborhood are $78.21, higher than the $73.59 average for the city.
Year to date, around 1.3 million more square feet of space in the neighborhood has been vacated compared to new leases signed.
The second-largest leasing transaction of the quarter was a 70,000-square-foot renewal by Stifel Financial Corp. at 1 Montgomery St. Leasing activity across the city during the second quarter totaled 859,000 square feet, a 36% decrease from the 1.35 million square feet leased in the first quarter, according to CBRE.
Still, there may be some activity in the works. CBRE reported that total tenant demand stood at 4.5 million square feet, a 61% increase from the end of 2022. The numbers are buoyed in large part by venture capital-based tech startups, including a number of AI companies looking for major expansions of their office space.
“Looking ahead, leasing activity will likely remain slow for the remainder of 2023, but the steady increase in tenant demand over the past six months indicates there will be a leasing uptick in 2024,” according to the CBRE report.
According to a July report from commercial real estate brokerage Newmark, 18 venture capital-backed startups have signed leases in the city in 2023 and more than 30 similar companies are currently touring the market.