However, Sammons said, activity is picking up. Tenant demand is at the highest since before the pandemic began, indicating that more companies are shopping for space. Sammons said that a direct lease, through a landlord, of 200,000 square feet is about to be announced, which will be the largest since the pre-Covid days.
“Some had pulled out and put on pause any sort of expansions, and we’re starting to see them reenter the market,” Sammons said.
There’s also been recent movement in subleases. Design software company Figma just took over 100,000 square feet of downtown space from Credit Karma, which moved its headquarters to Oakland.
And Dropbox has been finding takers for large chunks of its vacant space.
BridgeBio, a drug developer, recently took close to 53,000 square feet from Dropbox, and Vir Biotechnology, another life sciences company, agreed late last year to sublease about 134,000 square feet of the complex.
Vir’s price per square foot starts at $47.77 this year and rises 3% annually to $68.11 in 2032, according to the lease agreement. When Dropbox signed its original 15-year lease in 2017, the company agreed to pay $62 per square foot in year one, which climbed to $93.78 in the final year. In leasing 736,000 square feet at that price, Dropbox was then reportedly signing the largest office deal ever in San Francisco.
While Dropbox may have to rely on discounts and other perks to lure potential tenants, the company is in a unique position to attract biotech firms. Its complex is in an area called Mission Bay that’s filled with medical centers and is zoned for life sciences companies.
Demand for space is so high in the booming biotech industry that earlier this year private equity firm KKR purchased the property for about $1.1 billion, with Dropbox still responsible for the remainder of its lease.
“Life sciences companies are now looking at the city because they see this opportunity,” Sammons said. The Dropbox building “has the floor plates and the floor plans, and everything is built and ready for life sciences companies.”