S.F.’s newest office tower has its first tenant, but the remote work company doesn’t want to call it an ‘office’

On Thursday Thumbtack, a home service platform, announced that it had leased a floor at 415 Natoma, the 640,000 square-foot tower that is part of 5M, a mixed-use four-acre development at Fifth and Mission streets in San Francisco. The project is the result of a partnership between Brookfield Properties, which built the 415 Natoma building, and Hearst, which owns The Chronicle.

But anyone expecting the typical mix of private offices, cubicles and conference rooms will not find it in Thumbtack’s new 5M location. Instead Thumbtack, which last year transitioned to a “virtual first” work model, says the 20,000 square-foot space on the 13th floor will serve as the company’s first “library.” Thumbtack is moving from 1355 Market St.

Thumbtack executive Jelena Djordjevic, whose title is vice president of people, said the space would test “a new concept providing space for independent work and in-person connections for local team members.”

“At Thumbtack, we are rethinking the future of work as we embrace a virtual-first model,” Djordjevic said. “We’re intentionally not building an ‘office.’ We’re excited to introduce a brand new, purpose-built environment to connect in-person — be that through an in-person activity or after work happy hour — or simply to enjoy a change of scenery day-to-day.”

 S.F.’s newest office tower has its first tenant, but the remote work company doesn’t want to call it an ‘office’

A rendering of Thumbtack’s upcoming “library” in the 5M tower in San Francisco. The company doesn’t want its new space called an “office.”

Studio BBA

The “library” will have floor-to-ceiling windows but no conference rooms. It will have two distinct spaces. One will be for social gatherings and will feature lounge areas, an open kitchen and separate bar. The other will feature “dedicated space for quiet, heads down work with dedicated Zoom rooms to meet with colleagues from around the world,” according to Thumbtack.

The lease comes as San Francisco’s pandemic-era office occupancy is second lowest in the United States, with tens of thousands of Bay Area employees still working at home, many with no certainty about if or when they will be expected back at the office. Downtown office vacancy is currently at 23%, or 19.8 million square feet, while roughly 28% of the city’s office space is available for lease, although some of that is not vacant yet, according to CBRE.

The Thumbtack deal is unusual is that owners of new buildings tend to hold out for an anchor tenant willing to commit to a sizable chuck of the building. In this case interest from other prospective tenants is strong enough that Brookfield felt confident opening up with just one floor leased, according to Cutter MacLeod, director of asset management for Brookfield Properties.

“We have all taken our licks over the last couple of years but we are excited to welcome a design-focused occupant like Thumbtack,” said MacLeod. “The fact that they were looking for a new headquarters and a fresh start, and we were able to give that to them, underscores that this is the newest building in town, that we are open for business, and that tenants want what we are offering.”

Thumbtack, valued at $3.2 billion, was started in 2008, just five blocks away from 5M, and said it remains committed to growing its business in the city.

In addition to the new office building on Natoma alley, Brookfield recently opened The George, a 302-unit apartment complex just to the west of The Chronicle’s newsroom at 901 Mission St. The 4-acre mixed-use complex known as 5M will eventually include 856 housing units, a 648,000-square-foot office tower and a 12,000-square-foot community arts center that will open onto a plaza with a stage, a children’s playground and a dog run.

Nick Slonek, managing director of the commercial real estate brokerage Avison Young, said the Thumbtack deal is indicative of a “fluid market” that has yet to find its footing after nearly two years of rising and falling COVID infection rates, stop-and-start pandemic restrictions, and a workforce that is increasingly happy with remote work.

“The confusion around what the future of space will look like is one of the governors of the lack of activity in the market right now,” said Slonek. “Thumbtack calling it a library is evidence of that.”

He said most office leasing activity will be slow until the big tech players like Google and Facebook bring back a sizable number of their workers.

“At that point people won’t be calling their offices libraries any more,” he said.

As people return to work, however, many may seek to replicate the low-key neighborhood feel that working-from-home can offer: outdoor spaces, cafes and flexible casual meeting places, according to CBRE Research Director Colin Yasukochi. 5M has those qualities, he said.

“While downtown remains sparsely populated San Francisco’s neighborhoods are vibrant. Brookfield is trying to create that kind of environment,” Yasukochi said. “There are so many employees that have never seen the inside of their own company’s offices. There is a sense that more collaborative, social gathering spaces would be something highly desired by employees.”

J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen

Article source: https://www.sfchronicle.com/sf/article/S-F-s-newest-office-tower-has-its-first-16925073.php

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