Dropbox CEO Drew Houston speaks on stage during the Dropbox Work In Progress Conference at Pier 48 on September 25, 2019 in San Francisco
Matt Winkelmeyer | Dropbox | beautiful pictures
Dropbox made headlines in 2017, when the software company signed a contract largest office for rent ever in San Francisco, securing 736,000 square feet over 15 years in the city’s Mission Bay neighborhood.
The combination of a global pandemic in 2020, leading to a boom in telework, followed by a downturn in the tech market last year, has turned that vast space into a bird. financial seagulls with Initial minimum commitment is $836 million. As of September, that figure is $569 million.
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Dropbox said in it fourth quarter earnings announced on Thursday that it had recorded a loss over the period of $162.5 million “due to adverse changes in the corporate real estate market in the San Francisco Bay area.” Its total property losses for the year were $175.2 million, still far below won 400 million USD the company did at the end of 2020.
Of all the major US markets, San Francisco has been one of the slowest to recover from the Covid pandemic due to its heavy reliance on the tech industry, which often maintains a hybrid workforce, and in some case, was operating completely remotely.
Dropbox has chosen to move to “virtual advance” in 2020, announced in one blog post that “remote working (outside the office) will be the primary experience for all employees and the daily default for personal work.” That reduces the company’s need for office space and prompts the company to find tenants to sublease significant portions of its headquarters.
While Dropbox may sublease portions of its real estate to some biotech companies, there isn’t enough demand to take up all of the company’s free space. Tim Regan, Dropbox’s chief financial officer, said on Thursday that the sublease environment has turned out to be more challenging than management had anticipated, and the company no longer thinks it will sublease additional space in the area. San Francisco over the next few years.
“We were relatively quick to market our sublease plan, but the market has deteriorated, with many companies reducing their real estate footprint,” said Regan. “And certainly the supply of rental properties has increased, which has pushed our expected rental time out.”
Office vacancy rate for the third quarter was 24% in San Francisco, higher than the least since 2007, according to city number. Sales force, Airbnb, Uber and Zendesk was one of the other companies that bought the property defects in the city. Yelp headquartered in San Francisco lease in 2021.
Dropbox executives expected to sublease the company’s San Francisco property in mid-2023. They pushed that goal back two years and lowered the price the company expected. will receive.
“We have certainly been active and we continue to actively work with our landlords to look for subleases,” said Regan. “But at this point, this is our modified assumption, based solely on what is being faced at this time.”
CLOCK: Silver Linings Playbook: How Dropbox Relies on the Pandemic Curve
