Another office space haircut for a downtown SF tech firm, as Pinterest is bailing on 505 Brannan Street ten years before the lease is up, following rounds of layoffs in both December and February.
Image-sharing platform Pinterest was once one of the most high-flying tech firms in San Francisco, and years back, tried to use that crazy-money largesse to take over one of the buildings of the SF Design Center. That deal was scuttled amidst backlash, though not for lack of Pinterest VC money, so Pinterest instead took up the equivalent amount of space at the former Eventbrite headquarters at Fifth and Brannan Streets.
By 2015, they signed a lease for all 150,000 feet of a building just one block away at 505 Brannan Street (at Fourth Street), which was sometimes described as their headquarters. But come pandemic times, Pinterest has been shedding office space like so many other tech firms, and the SF Business Times reports that the company is leaving 505 Brannan ten years before the lease is up in 2033, and seeking a sublettor.
Pinterest intends to sublease the space (if they can) and made the announcement in a Monday Securities and Exchange Commission (SEC) filing.
"The company currently intends to continue to pay all contractual rent payments but plans to sublease all or a portion of our office space at 505 Brannan Street and negotiate early lease terminations, which could materially affect the company’s cash flows," Pinterest stated in their filing. "The actual amount and timing of any resulting impact to cash flows will depend on the outcome of any negotiations with landlords and potential subtenants."
Pinterest is selling the move as a shift to remote work, which may be somewhat true. The company did have a profitable fourth quarter in 2022, but overall lost $96 million last year, and did small rounds of layoffs in both December and February.
“Our hybrid working model, PinFlex, empowers Pinterest employees worldwide with the flexibility to choose where they work best — whether that’s at home, in one of our offices, or a co-working space," the company said in a statement to the Business Times. "With this flexibility, our global workforce is now distributed across more cities and countries than ever before and spending less time in our offices. We made the decision to strategically reduce our square footage in select locations to better align how Pinterest employees are choosing to work with our goals for business efficiency and sustainability.”
But it remains an open question whether companies that want to sublease their office space actually can. The SF office vacancy rate is now 29.4% (it was just 4% before the pandemic hit), and things are so bad that even Salesforce was looking to sublease space in the building that bears its name.
Image: Heller Manus