Google is spending an insane amount of money to lease a parking lot in south east San Francisco, a commercial real estate agent with knowledge of the deal confirmed to The Standard.
The 62-month lease of the 3.54 acre yard rents for $2.85 per square foot—costing the tech giant roughly $438,900 a month—or over $27 million all in.
The real estate agent asked not to be named but believes Google has leased the lot to park its commuter shuttles there.
"I've seen [Google buses] going in and out," the source said.
Speculation in The Real Deal suggests the lot could be used for Google's Waymo self-driving car project.
A possible reason behind the immense rent price could be scarcity, as San Francisco does not have many empty outdoor lots, especially large ones suitable for a fleet of buses. A Loopnet listing says that the site is ideal for "fleet management."
"Land is more valuable than warehouses right now. We have warehouses, we don't have land," the source said.
The site was purchased by Goodman North America in May 2022 for $70 million, from school bus charter company First Student, according to The Real Deal.
The site, located between the Bayview and Potrero Hill, was first developed in 1973 according to property records. It is located near highways 280 and 101, two major transit arteries connecting the city to the wider Bay Area.
Even with the exorbitant rent price, profit margins on the land will be slim with single-digit percentage returns on the investment, according to the industry source.
"No one's getting rich here," the source said.
Google, CBRE, and Goodman were contacted for comment.
Garrett Leahy can be reached at [email protected]